Education Savings

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Education planning for their future

A J.P. Morgan Advisor can help you with a 529 plan with no upfront fee, so more of your money is invested toward your goal.

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Define your savings goals

The earlier you start investing the better. Tuition costs vary based on school and degree and are projected to rise. Our approach combines J.P. Morgan Research with an understanding of your goals to help you determine what it will take to get there.

Projected cost of a four-year college education

Private (in 2038)
$517,293

Public (in 2038)
$227,684

Explore your funding options

You can pay for education through a combination of savings, investing, borrowing and financial aid. Everyone’s approach is different and we can help you understand what would work best for you and your family.

A tax-advantaged investment product for education that has a low impact on financial-aid eligibility.

Benefits

May be applied to K-12 tuition, vocational school, registered apprenticeships, college, graduate school and student loans.
Investments grow tax-free.
Withdrawals are not subject to federal tax (when used for qualified education expenses).
You can “frontload” your contributions by making five years’ worth of gifts in a single year.
Easy to establish and maintain.

Disadvantages

You're limited to the investment options offered by the 529 Plan.
Using annual exclusion gifts to fund a 529 account precludes use of the annual exclusion amount for other purposes.

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.
Withdrawals are not subject to federal tax (when used for qualified education expenses).

Disadvantages

Custodial accounts are considered assets of the student and must be turned over to them when they reach the age of maturity, and also 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.

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're 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.

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 don't 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.

Put your strategy to work

Based on your goals, we can help you determine how to pay for college with a strategy that may reduce taxes and offer opportunity for growth. The earlier you start investing, the more you can take advantage of compound growth.

Learn more about 529 plans

The benefits of a 529 plan

Account growth over 18 years

Over 18 years, potential growth for a 529 plan is $219,950 and a savings account is $144,144

Assumes an initial $10,000 contribution, a monthly contribution of $500, an annual investment return of 6% and an annual cash return of 2%.

Adjust your approach as you go

The strategy you develop today is just a starting point. We’ll help you track your progress and make adjustments as the market shifts or new priorities come your way.

Explore our education checklist

Wherever you are on your path toward saving for school, there’s always a best next step. Take a look at our education checklist to find inspiration for your next move.

View the education planning checklist

Work with a J.P. Morgan Advisor

Work one-on-one with a dedicated advisor who will help you design an investment strategy for you and your family’s goals.

Learn about our financial advisors

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Learn from our expertise

Browse the latest commentary, news, and education from J.P. Morgan specialists to help you make the most of your investments.

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Explore the College Planning Essentials

Michael Conrath, CFP^®, CRPC, executive director, is Head of Education Savings for J.P. Morgan Asset Management. He is an advocate for educating families and their financial professionals on the importance of investing for college, and he leads the firm’s 529 plan strategy, product and distribution efforts across client relationships.

Read the College Planning Essential guide

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