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Education Savings

It’s never too early to plan your children’s future

Access knowledge and expertise to move closer to your education goals.

Define your education goals

For some families, education costs start before their children even go to college. What are your education funding needs and what will it cost? Be honest. Be realistic. And let us help you get closer to your education goals.

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Start today and see your savings grow through the power of compounding

 

The advantages of starting early

Total accumulation of monthly contributions over 6, 12 and 18 years

 

Total accumulation

Source : J.P. Morgan Asset Management, College Planning Essentials: A comprehensive guide to saving and investing 2018-2019 Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Chart assumes an annual investment return of 6%, compounded monthly.

 

Understand your options

There are a number of ways to pay for education costs. Most families tend to use a combination the options below to pay for college. Each option has its pros and cons, but we can help you decide on an approach that works for you.

529 plans

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A tax-advantaged investment account designed as a way to save for education expenses.


Benefits

  • May be applied to K-12 tuition in addition to college and graduate school.
  • Investments grow tax free.
  • Withdrawals are not subject to federal tax when used for qualified education expenses.
  • You can front-load your contributions, making five-year gifts in a single year.
  • Easy to establish and maintain.
  • Certain states provide state tax deduction for contributions.

Disadvantages

  • You’re limited to the investment options offered by the 529 plan.
  • Using the annual exclusion gift to fund a 529 means you can’t use the exclusion for other purposes.

Coverdell/Education Savings Account (ESA)

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A tax-advantaged account that can be used for any level of education and has little impact on financial aid eligibility.


Benefits

  • Earnings accrue free of income tax.
  • Distributions may be made free of income tax as long as they are made for qualified education expenses.
  • Assets may be invested in almost any product, including stocks, bonds and mutual funds.
  • Easy to establish and maintain.

Disadvantages

  • Maximum investment is limited to $2,000 per year, per beneficiary. The $2,000 contribution maximum is gradually phased out if your modified adjusted gross income falls between $190,000 and $220,000 ($95,000 and $110,000 for single filers).
  • Contributions must be made before the beneficiary reaches age 18.

Custodial accounts

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Specialized accounts that can be used for a child's general benefit, not just for education.


Benefits

  • The UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) are custodial accounts that can be applied across a variety of financial needs, not just college funding.
  • The custodian can invest the account’s assets in any manner they choose.

Disadvantages

  • Custodial accounts are considered assets of the student and, as such, may limit financial aid eligibility.
  • Using annual exclusion gifts to fund an UTMA account may prevent the use of the exclusion for other purposes.
  • These accounts are typically taxed at the same rate paid by the parents.

Financial aid

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There are a variety of financial aid packages, from scholarships to federal student loans. These options can be used to supplement your education savings.


Benefits

  • Often, grants and scholarships do not have to be paid back.
  • Federal student loans are easy to apply for and offer flexibility when it comes to repayment.
  • Student loan interest can be tax-deductible.

Disadvantages

  • Merit-based scholarships can be very competitive and not everyone qualifies.
  • Only 0.3% of students receive enough free aid to completely cover their education.
  • 32% of financial aid is disbursed through federal loans that need to be paid back with interest.
  • Today, a record 4 in 10 households owe student loan debt.

Get started

Saving for education doesn’t need to be scary — let us point you in the right direction.

J.P. Morgan Advisor

Learn how working with our advisors can help you take a comprehensive approach to planning and help make your education goals a reality.

Find a branch

Ready to chat? Come into your local branch to learn how Chase can help you get where you want to go.

Put J.P. Morgan’s thinking to work for you

Get the relevant insights you need to make smarter investment decisions.

Goal setting

Utilizing a goals-based approach for your investment journey can help keep you on track.

Power your portfolio with compounding

Compounding sounds complicated, but it is a simple concept that is one of the most powerful tools you can utilize when it comes to growing your wealth.

Mind over money

Our financial thoughts and behaviors are often at odds with our goals. Here’s how to bring them into better alignment.

Frequently asked questions

What’s a 529 plan?

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A 529 plan is a tax-advantaged investment product designed as a means of saving for education expenses.

Can 529 plans be used for K-12 education?

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Yes. A rewrite of the U.S. federal tax code in December 2017 allows money in 529 plans to be used to pay for tuition in grades K-12. At the time of the rewrite, some states needed to make amendments to their state-level 529 rules so participants can fully reap the tax-free benefits. A J.P. Morgan Advisor can advise you based on the latest rulings in your state, and recommend a plan that helps you save for tuition and other education costs.

Can saving and investing help pay for education?

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Choosing the right savings plan and following time-tested investment strategies may help you reduce taxes, increase growth potential and accumulate more for education. Plus, there's this: it costs less to invest now than to borrow later.

Can I count on financial aid to fund college?

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While many students qualify for some financial aid, only 0.3% of college students receive a "free ride" from needs-based grants and merit-based scholarships. We’ll help you understand the many ways to pay for college and how financial aid is one piece of the pie — but probably not the whole pie.

Should I borrow money to pay for higher education?

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This is a tough call, and a personal one. Taking on additional debt now could compromise your financial future. After all, there is no such thing as financial aid for your retirement. Borrowing to pay for college is a big decision so make sure you consider the risks.

How can I work toward all financial goals simultaneously?

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Prioritizing your goals doesn't always mean ranking them by what’s next on the horizon. You don’t want to achieve one goal at the expense of another. An appropriate financial strategy starts with an assessment of your current situation and a budget to help prioritize your competing financial objectives. Meeting with a J.P. Morgan Advisor can help you determine how to accommodate multiple goals that span various timeframes.