Education & College Planning

Like most people, you have dreams for your children and you know the importance of a college education in helping to make those dreams a reality.

Although saving for college can seem overwhelming, remember that every contribution you make toward your child’s education adds up over time. It doesn’t matter at what stage in your child’s life you start contributing. The important thing is that you start saving and you stick to your plan.

College Financing resources
Keeping up with a constantly changing and complicated financial aid and college financing system can be challenging. Resources such as the ones below can provide information to help you meet your financial aid goals.

Financial Aid and Scholarship Resources on the Web
Free Application for Student Aid (FAFSA) — required for all financial aid www.fafsa.ed.gov
Information on different forms of aid, tips on applications and calculators to estimate aid www.finaid.org
Florida Bright Futures Scholarship Program rewards students for their academic achievements during high school by providing funding to attend postsecondary education in Florida. www.floridastudentfinancialaid.org
When your child is ready for college, this plan covers the actual cost at any Florida public college or university, or you can transfer the value of the plan to the majority of colleges in Florida, technical schools and out-of-state colleges. www.myfloridaprepaid.com
Comprehensive overview of college funding, including a financial aid page www.savingforcollege.com

Turning college dreams into reality.
Today, the average cost of attending a four-year private college is $30,6471 and will likely continue to rise. Although paying for college usually comes from a number of sources including federal loans, grants and scholarships, saving as early as possible is more important than ever. One of the most attractive ways to help can be a 529 savings plan.

 

How does our college savings plan compare?
Today, you have more choices for college saving and investing than ever before. In addition to 529 savings plans, alternative savings vehicles clude Coverdell Education Savings Accounts (formerly called Education IRAs), UGMA/UTMA accounts, Series EE Savings Bonds and taxable investment accounts such as mutual funds or bank savings accounts. While each of these college savings options has its distinctive features, there are benefits offered by 529 savings plans that may exceed these alternatives.

 

  529 Plans Coverdell ESA UGMA/UTMA Taxable Account
Portfolio management style Multi-manager or “managing the managers” approach Self-directed Self-directed Self-directed
Income limitations None  AGI limits apply None None
Maximum yearly contribution per Beneficiary (individual contributor) $13,000 without exceeding the annual federal gift tax exclusion ($65,000 if accelerated over a five-year period.);1 total contributions cannot exceed $320,000 per Beneficiary $2,000; can contribute to Coverdell ESA in same year as you contribute to 529 plan Unlimited; $13,000 without exceeding the annual federal gift tax exclusion Unlimited; $13,000 without exceeding the annual federal gift tax exclusion  
Account earnings Tax-free if used for qualified expenses Tax-free if used for qualified expenses Taxable Taxable to owner
Ability to change Beneficiaries Yes Yes No Not applicable
Control of distributions   Account Holder Account Owner Custodian; transfers to minor upon reaching age of majority Account Owner
Investment options  Range of Securities Range of securities Range of securities Range of securities
Qualified use of proceeds Any eligible college, university or graduate school in the U.S.; equipment or services for special needs students  Any eligible college, university or graduate school in the U.S.; qualified elementary and secondary school expenses; equipment or services for special needs students Use for minor  Unlimited
Taxation of qualified distributions Tax-free    Tax-free A portion may be federal tax exempt; some/all income may be taxed at child’s rate  Earnings and capital gains taxed at owner’s rate 
Penalties for nonqualified distributions 10% federal penalty assessed on earnings 10% federal penalty assessed on earnings None None
Ownership of assets for federal financial aid purposes (may vary with private institutions) Typically the Account Holder  Account Owner    Student Account Owner

Tax advantages help your investments work harder
Whether you are saving for a child, a grandchild or yourself, your money should work as hard as possible to keep up with the rising costs of education.

**Note: The above illustration does not depict an investment in John Hancock Freedom 529, it is a hypothetical example of tax-deferred growth and is for comparison purposes only. It is not a guarantee of future results. Rates are subject to change. This illustration does not reflect the effect of asset-based or account and program fees. These fees would reduce the performance shown in the above illustration. The investment return and principal value of an investment may fluctuate so that distributed investments may be worth more or less than the amounts originally contributed. Tax deferral may work best for long-term goals.

Your legacy is your gift for the future.
Give the gift of education. Often, grandparents or others help fund a college education by gifting money to a child. 529 savings plans have two important features that make gifting money for education an attractive benefit.
  • Accelerated gifting allows you to make five years of contributions at one time — up to $65,000 per Beneficiary or $130,000 per Beneficiary if married filing jointly — without incurring a federal gift tax so you can realize the power of tax deferral and investment growth sooner.
  • It also removes significant assets from the donor’s federal taxable estate. And, if the donor is the account holder, he or she does not relinquish control of the money.

Hypothetical Example, used for illustrative purposes only. Rates of return, values and assumptions are not guaranteed and are not indicative of past or future result.

For more information, please contact your representative or our firm so we may assist you.