529 Comparison

529 Virginia College Savings Plan

The Virginia 529 College Savings Plan includes four separate programs from which to choose.

  • Virginia Prepaid Education Program (VPEP)
  • Virginia Education Savings Trust (VEST)
  • CollegeAmerica®
  • CollegeWealth®

The Virginia Prepaid Education Program is a 529 program that allows Virginia families to prepay college tuition. Buy it at today's price and it will pay for tuition whenever the beneficiary is ready for college. With the cost of college rising so quickly over the last several years, VPEP offers many advantages to those who decide to take part. Although the payments for a VPEP contract will pay in full for tuition and fees at Virginia public colleges and universities, it can also be used towards private schools both in Virginia and around the country. Of course, full tuition payment is not guaranteed then. Virginia does guarantee the cost of the tuition and fees, so investors do not have to worry about market fluctuations eating into their principal.

Unlike many other plans, the Virginia 529 has a limited enrollment time, usually from December through the end of March each year. Also, the plan can only be purchased for children who are from newborn through the ninth grade. Another thing to remember is that either the account owner or the beneficiary must be a Virginia resident when the account is opened.

The Virginia Education Savings Trust (VEST) on the other hand, is a 529 program that allows you to save for anyone's college education with only a $25 minimum deposit, no residency requirements and no age restrictions. VEST has several different investment possibilities, including aged-based portfolios which will begin with aggressive investments which move towards more conservative allocations as the beneficiary approaches college age. Other portfolios are not age dependent and money may be moved as the investor sees fit. There are no guarantees with the VEST 529 Plan and account value can fluctuate up or down depending on the swings of the market.

Your investment in the 529 Virginia Education Savings Trust will grow federal tax-deferred. And 529 owners who are Virginia taxpayers can deduct up to $4,000 per year from their Virginia State income tax return. Unlike the VPEP, which only covers tuition and fees, funds invested in the VEST 529 program can also be used for various other educational expenses like room and board, books, supplies and equipment...even a computer, if required by the school.

The CollegeAmerica® program is a tax-free Virginia 529 account which is only offered through investment advisors. It is run in partnership with the American Funds, a large and respected mutual fund company. All investments are made through a variety of American Funds mutual funds. As with the VEST plan, monies grow tax-deferred and withdrawals are state and federal taxfree when used for eligible educational expenses.

CollegeWealth® is another 529 program which offers an FDIC insured option, as well as allowing tax-deferred growth. This will probably appeal to conservative investors as the funds are deposited in a high yield moneymarket account. While anyone can open a CollegeWealth® account, Virginia taxpayers will benefit most since they can take advantage of the $4,000 per year stae tax deduction. There are no annual fees or monthly maintenance fees, and the $25 minimum to open an account puts it within reach of everyone. Participating banks include the Union First Market Bank and BB&T.

For more information on Virignia's 529 plan options, visit http://www.virginia529.com.