Illinois 529 Plan And College Savings Options
Illinois has a 529 plan called Bright Start that can help you save for college. Illinois also has a 529 Able Plan as well.
If you live in Illinois, these might be good options for you to save for college.
These programs are designed to help make college more affordable - so that you can get the education you need. By saving for college early on, you can make paying for college easier down the road.
If you're not quite sure how 529 plans work, check out this starter guide to What Is a 529 Plan?
There is also a specific order of operations to save for college that we recommend families follow. These programs are specific to the State of Illinois. Each state has different rules when it comes to 529 plan savings.
Average Cost Of College In Illinois
When saving for college in Illinois, it's important to take into consideration the cost of attendance in the state. If you choose to go to an out-of-state school, you need to look at the average cost of attendance in that state.
There are 281 colleges and universities in the State of Illinois.
The total average cost of college (Cost of Attendance) in Illinois for in-state residents is $24,241 for 2020. This includes tuition, room and board, books and supplies, and other expenses.
For just tuition alone, the average undergraduate tuition for in-state residents is $5,726 for 2020. The cost of tuition in Illinois has been rising at about 2% per year.
See how this compares to the average cost of college here. Keep in mind the average student loan debt by graduating class here.
Explore the data here.
Illinois 529 Plan Tax Information
Tax savings is one of the big benefits of using a 529 plan to save for college. On a federal-level, there is no tax savings for contributions, but qualified distributions are tax-free.
Here are the special tax benefits and considerations for using a 529 plan in Illinois.
Illinois offers a state tax deduction for contributions to a 529 plan of up to $10,000 for single filers and $20,000 for married filing jointly tax filers.
For employers in 2020, they may claim a credit against Illinois tax for 25% of matching contributions made to an employee's account in an Illinois 529 plan, with a maximum annual credit of $500 per employee.
Bonus Contribution: Starting in 2021, Illinois will automatically deposit $50 into a 529 college savings account for every child born or adopted in the state.
Minimum: There is no minimum contribution.
Maximum: Accepts contributions until all account balances for the same beneficiary reach $450,000.
Rollovers into the state plan are considered for the tax deduction for the contribution portion only.
Outbound rollovers are subject to the recapture of prior state tax deductions.
Qualified distributions from an Illinois 529 plan are tax-free.
However, qualified distributions from a non-Illinois plan are only tax-free provided the plan meets certain disclosure requirements.
Illinois does not conform with Federal law in regards to using a 529 plan for K-12 tuition. See this guide: Using a 529 Plan For Elementary and High School Private Education.
Illinois does not conform with Federal law for using a 529 plan for student loans.
Non-Qualified Distributions Taxes, Penalties, Recapture
A non-qualified withdrawal from an Illinois 529 is subject to recapture of prior years tax deductions.
Illinois 529 College Savings Plan Options
Illinois has several 529 plan options - one consumer plan and one plan that is sold by financial advisors (we're big advocates of doing-it-yourself, you don't need to pay a financial advisor for this). They also have a pre-paid tuition program that is no longer taking new enrollment.
Bright Start Direct-Sold College Savings Program
The Bright Start Direct-Sold College Savings Program is the name of Illinois' 529 Plan. This plan offers a variety of investment options, including age-based portfolios that become more conservative as the child approaches college, and static investment fund options.
The funds offered include Vanguard, T. Rowe Price, DFA, Dodge & Cox, BlackRock, and more.
There is a program management fee of 0.105%.
The underlying funds all charge expense ratios from 0.02% to 0.70% depending on the investment option.
Who Should Use It:
We recommend that Illinois residents use the Bright Start College Savings Program plan due to the tax benefits, low fees, and plan investment options.
We recommend that out-of-state residents utilize other plans.
College Illinois! 529 Prepaid Tuition Program
The College Illinois! 529 Prepaid Tuition Program is Illinois' prepaid tuition plan. Program enrollment for 2019-20 is currently on hold.
The plan cost is specifically based on the age of your child when you purchase the contract. The younger your child is when you buy a contract, the more you save on the purchase of a prepaid tuition plan.
Illinois 529 Able Plan Options
529A Able accounts are accounts designed to help those with disabilities escape poverty and save for themselves. Learn more about 529A Able Plans here.
The Illinois ABLE is a 529A plan open to all residents in Illinois.
This plan allows contributions of up to $15,000 per year from all sources.
It does have a minimum initial contribution amount of $25 per account. The minimum subsequent contribution amount is $25.
The plan does have an account maintenance fee of $60 annually, assessed at $15 per quarter. It also has a program management fee of 0.32%.
You can open an Illinois ABLE Plan here.
Other Programs To Save For College
A 529 plan is one way to save for college. Remember, we have a full guide on our approach to college savings here - and it helps you find other options.
If you're looking for ways to boost your college savings, check this out:
CollegeBacker is one of our favorite ways to save for college because they make gifting for college so easy. You can setup an account, link your 529 plan (in most states), and get a unique URL that you can share with friends and family to save for your children's college.
Plus, they have Backer Bucks, which allow you to earn rewards and rebates for the shopping you already do - directly deposited into your children's 529 plan.
Illinois Financial Aid
Using a 529 plan isn't the only way to save money for college. Each state typically offers a variety of financial aid programs for their residents. These include scholarships and grants, and sometimes unique forgivable student loan opportunities.
Check out the list of Illinois Student Loan and Financial Aid Programs.
Return to the full list of 529 Plans By State.