Virginia – Saving For College in 2023
As parents, grandparents and students, we know college is coming and that we're somehow going to have to pay for it someday. Fortunately, we have many options available to us, including savings bonds, the stock market and 529 plans. Starting a 529 account now is always the best option, no matter how old you (or your child) is. While playing the stock market may yield higher returns on your investment, placing your money into a 529 plan allows it to grow in a tax-free environment. One study even found that when the federal tax benefits were taken into consideration, 529 plans outperformed their benchmarks in every category.
Virginia has its own state-operated 529 plan called Virginia529 inVEST. It is important to note that your child does not have to go to a VA college or university to use this savings account. 529 plan funds can be used at any accredited college or university across the nation, including some K-12 private schools!
Virginia College Costs & Trends
Colleges and universities across the United States experienced increased operating costs of 2.5% in 2019. This most recent inflation figure was down slightly from the 2.9 percent increase in 2018 and 3.4 percent increase in 2017. These costs are forwarded directly to students in the form of higher tuition and living expenses. As these costs steadily rise every year, parents are investigating how to help offset these future higher education costs.
These rising costs are hitting closer to home in Virginia as well. Virginia's higher education costs rose by 55.7% in just the last 10 years, ranking as the 10th highest state.
The table below shows the average one-year costs last year (2022) for different types of Virginia colleges and universities.
|Ownership||Degree||Schools||Public Out-of-State Tuition||Public In-State Tuition||Median Debt||Total Annual In-State Cost|
These costs rise every year. Rising tuition is a major driver of these increased higher education costs. Tuition at a 4-year university in VA rose 22% (ranked 12th in the US), while a 2-year or trade school increased their tuition by 15 percent.
529 Tax Benefits for Virginia Residents
Virginia offers tax benefits and deductions when savings are put into your child's 529 savings plan.
|For single filers:||$4,000/yr per beneficiary|
|For joint filers:||$4,000/yr per beneficiary|
Best 529 Plans in Virginia
Virginia operates a multi-manager, direct-sold 529 college savings program (Invest529) and an advisor-sold 529 plan (CollegeAmerica) utilizing American Funds. Both Virginia 529 plans are available to residents of any state. Virginia's prepaid tuition program (Prepaid529) closed to new enrollment as of April 30, 2019. The CollegeWealth program offered through Union Bank & Trust was closed during the first quarter of 2017.
|State Plan Name:||Virginia529 inVEST|
|Maximum Contribution:||The value across Virginia529 accounts can’t exceed $500,000 per beneficiary.|
|Fees:||0% to 0.67% asset management fee, depending on the type of account; 0.10% administrative fee; Virginia 529 may impose a $50 for paper applications, a $25 fee for account cancellation and a $25 fee for rollover or change of account owner.|
Virginia 529 Plan Statistics
There are 2,736,444 registered schools in Virginia with a total value of $74,372,377,955. That is an average of $27,178 per account. Unfortunately, 529 plans are not widely used... a 2018 study by Edward Jones found that only 29 percent of Americans were even aware that 529 savings plans exist!