The idea for this article started with a terrible college gifting option. Instead of people going for an expensive option to give the gift of college savings (for the holidays, birthdays, new baby, or other occasions) I wanted to pull together a consolidated list of college gifting options by state.
The Expensive College Gifting Option
I was online searching for articles on “Saving for College” the other day, and noticed an article about a company that lets you give a gift card for college savings. At first I thought it sounded interesting – a gift card for college? Sounds like a good gift! But then I wondered how they make money, and started doing some digging on their site. And WOW did this sound expensive.
- Activation fee – for a credit card it ranges from $3 all the way up to $12. By E-Check it’s a flat $3 fee.
- Want a physical card? That’s another $3-$25, depending on mailing method
- Recipient doesn’t cash the card? Inactivity fee of $5 after a year, and another $5 if the funds revert to the bank
- Paper transaction history? That’ll be another $3
- Tax deductible? No!
I also read an article in US News and World Report that talks about options to gift college savings, and one of them is a gift card sold at Toys R Us and Babies R Us that costs $6!
So what’s the selling point? Apparently it’s that you don’t need to know the recipient’s 529 account information to make a contribution.
Giving the Gift of College Savings – For Free
You may be asking yourself, isn’t there an easier, less expensive way to do this? Why yes, reader, there sure is. You could give cash to the parents and ask them to make the 529 deposit – downsides to that approach being that you can’t take the tax deduction (if applicable), and you need to trust the parents to make the deposit.
But many 529 plans have what’s called an eGift option, or other online gifting, where the parent can set up the plan to send an e-mail with online and mailing contribution options. And it’s free! And tax deductible to you, if applicable for your state and the plan. Every birthday and Christmas, I send out a gifting invitation to relatives for my three boys. All those small contributions over time (as little as $25!) will add up to a lot compounded over the years.
What options do you have for a 529 gift?
- You can open a new 529 in the recipients name
- Gift to an existing 529 held by the parents or another account holder
- You can also open a new 529 in your own name and transfer it to the recipient when they graduate high school, if you want to keep it a surprise.
If you’re an account owner with children, and you’re interested in getting college savings as a gift? Check out my easy one-stop college gifting guide to see what 529 gifting options are available for your account.
Looking to see what’s available in your state, or the beneficiary’s state? Look no further! Here’s a handy-dandy list for you last minute, financially conscious gifters.
Note – I didn’t include advisor sold funds here. Buying direct is much less expensive. Also note that the tax information comes from Saving for College (link at the end of the chart) and is for 2016, it may change in the future. Insert disclaimer of consulting a tax professional for more on your specific situation applies here.
| Plan | State | 2016 Morningstar Rating | Gifting Option & Link | Tax Benefits |
| College Counts 529 | AL | Bronze | Available online | Up to $5k individual/$10k joint |
| T Rowe Price College Savings Plan | AK | Silver | Mailing only | |
| Fidelity Arizona College Savings Plan | AZ | Bronze | Online gifting available | Up to $2k individual/$4k joint |
| Arizona site | ||||
| The Gift College Investing Plan | AR | Available online or through the mail | Up to $5k individual/$10k joint | |
| Scholar Share | CA | Silver | Available online or through the mail | |
| College Invest | CO | Bronze | Available online or through the mail | Contributions are deductible (not rollovers) |
| Connecticut Higher Educational Trust | CT | Bronze | Available online or through the mail | Up to $5k individual/$10k joint (contributions only, not rollovers) |
| Delaware College Investment Plan | DE | Bronze | Online gifting available | |
| Delaware site | ||||
| DC College Savings Plan | DC | Mail or phone contribution, or you can open an account | Up to $4k individual/$8k joint, but only for account owner | |
| Florida Prepaid or 529 | FL | Mailing only | ||
| Path 2 College 529 | GA | Available online or through the mail | Up to $2k per beneficiary individual/$4k per beneficiary joint (not rollovers) | |
| Hawaii 529 | HI | Available online or through the mail | ||
| iDeal Idaho College Savings Program | ID | Available online or through the mail | Up to $4k individual/$8k joint | |
| Bright Start College Savings | IL | Bronze | Mailing only | Up to $10k individual/$20k joint (principal only for rollovers) |
| College Choice 529 | IN | Bronze | Available online or through the mail | 20% credit on up to $5k in contributions (not rollovers) |
| College Savings Iowa | IA | Bronze | Available online or through the mail | Up to $3,188k individual/$6.376k joint, but only for the account owner |
| Learning Quest | KS | Available online or through the mail | Up to $3k per beneficiary individual/$6k per beneficiary joint for KS and non-KS plans (not rollovers) | |
| Kentucky Education Savings Plan Trust | KY | Available online or through the mail | ||
| Start Saving for College | LA | Mailing only | Up to $2,800 per beneficiary individual/$4,800 per beneficiary joint | |
| Next Gen | ME | Bronze | Mailing only | Matching gifts available |
| Up to $250 per beneficiary per year to ME and non-ME plans (income limits apply) | ||||
| Maryland College Investment Plan | MD | Silver | Mailing only | Up to $2,500 per beneficiary individual/$5,000 per beneficiary joint |
| Massachusetts 529 Plan | MA | Bronze | Online gifting available | Up to $1k individual/$2k joint |
| MA site | ||||
| Michigan Education Savings Program | MI | Silver | Available online or through the mail | Contributions are deductible, but not rollovers |
| Minnesota College Savings Program | MN | Available online or through the mail | ||
| Mississippi Affordable College Savings | MS | Available online or through the mail | Up to $10k individual/$20k joint | |
| Missouri MOST | MO | Silver | Available online or through the mail | Up to $8k individual/$16k joint to MO and non-MO plans, but only for account owner (except for spouses filing jointly) |
| Achieve Montana | MT | Available online or through the mail | Up to $3k individual/$6k joint to MT and non-MT plans, but only for account owner, owners spouse, or owners custodian/parent | |
| NEST | NE | Bronze | Available online or through mail | Up to $10k ($5k married filing separately) , account owner only |
| Vanguard 529 College Savings Plan | NV | Gold | Available online or through the mail | |
| UNIQUE College Savings Plan | NH | Bronze | Online gifting available | |
| NH Site | ||||
| NJ Best 529 | NJ | Mailing only | ||
| The Education Savings Plan | NM | Mailing only | Contributions are deductible | |
| NY’s 529 College Savings Program | NY | Silver | Available online or through the mail | Up to $5k individual/$10k joint (account owner or account owner spouse only) |
| NC’s National College Savings Program | NC | Mailing only | ||
| College SAVE | ND | Available online or through the mail | Up to $5k individual/$10k joint | |
| College Advantage 529 | OH | Silver | Available online or through the mail | Up to $2k per beneficiary per year |
| Oklahoma College Savings Plan | OK | Available online or through the mail | Up to $10k individual/$20k joint | |
| Oregon College Savings Plan | OR | Bronze | Available online or through the mail | Up to $2,310 individual/$4,620 joint |
| Pennsylvania 529 | PA | Available online or through the mail | Up to $14k per beneficiary per year individual/$28k per beneficiary per year joint to PA and non-PA plans (not rollovers) | |
| College Bound 529 | RI | Silver | Available online or through the mail | Up to $500 individual/$1000 joint (not rollovers) |
| Future Scholar 529 | SC | Bronze | Available online or through the mail | Contributions are deductible |
| College Access 529 | SD | Negative | Mailing only | |
| Gift Certificate | ||||
| TN Stars | TN | Available online or through the mail | ||
| Gift Certificate | ||||
| Texas College Savings Plan | TX | Available online or through the mail | ||
| Utah Educational Savings Plan | UT | Gold | Available online or through the mail | Max credit $95 per beneficiary individual/$190 per beneficiary joint. Account must have been established when beneficiary is under 19. Contributions from non-account owners are credited to the account owner. |
| Vermont Higher Education Investment Plan | VT | Available online or through the mail | Up to $2,500 per beneficiary per year individual/$5k per beneficiary per year joint (account owner or account owner spouse only) | |
| Virginia 529 Invest | VA | Gold | Mailing only | Up to $4k per account per year (fully deductible over 70). Contributions from non-account owners are credited to the account owner. |
| GET 529 (prepaid) | WA | No gifts until 2017 | ||
| Smart 529 | WV | Negative | Mailing only | Contributions are deductible |
| Edvest College Savings Plan | WI | Bronze | Available online or through the mail | Up to $3,100 per beneficiary per year |
| None | WY | N/A |
Looking to learn more, about 529’s or research how much of a tax deduction you might get? Here’s a handy set of resources for you to learn more:
- What is a 529 plan?
- Morningstar 2016 college fund ratings
- An overview of different options for saving for college
- Detailed information on tax deductions
Check out more about saving for college in my post about my college compact with my kids, why sometimes the advice that you can get loans for retirement but not college is wrong, or my thoughts on the How America Pays for College study by Sallie Mae.
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Goodness – saving for college is really complicated in the US! We are very lucky in my country. Our main Universities are funded by the State and are free. No tuition fees at all. We just need to pay for books and consumables. Kids tend to live at home and commute, so no major living expenses either. It’s a big relief, frankly. Makes saving a lot easier.
That would be so nice! What country are you from? Unfortunately here it’s pretty much funded by the parents-especially if you make a good income.
I live in Malta, Europe. We have state funded education and health. It’s a great weight off our mind not to have to worry about saving for our kids’ education or having to pay insurance. That said, we do not have the tax incentives you have when it comes to saving for retirement – so I guess there are pros and cons 🙂
Somehow I missed this post the when it came out.
I actually bought one of the gift-of-college cards at Toys-R-Us. At the time, I had some kind of credit card bonus incentive, making the fee worth it.
The experience at Toys-R-Us wasn’t great. They wanted to check my ID, but the card was inside the credit card machine, so they couldn’t check until the transaction was done. Old dingy store with suspicious clerks wasn’t fun.
The redemption part wasn’t fun either. The process was kind of confusing to get it credited to my son’s 529. It also took about 10 days before it showed up in the 529. The fear of a glitch in the process stopped me from ever going back.
Thanks for sharing your experience Mr. JS – I have never gotten one of those gift cards because I always just e-mail the link for direct contribution to family members who are interested in gifting. That’s a weird process they have there.
It’s might be good to point out that people are not limited to contributing to the 529 for their state! There are definitely tax implications in some places if you choose to invest in another 529 plan, but in some cases the fees or investment options may make it worth it.
True! The purpose of the guide is to show you how to do a contribution to any states 529, you should do research on which state is best for you.