The College Savings Plans of Maryland offers two smart 529 plans: The Maryland Prepaid College Trust and The Maryland College Investment Plan.

Basics of 529 College Savings Plans

Learn how to save for your child’s future with 529 college savings plans.
Basics of 529 College Savings Plans

Learn how you can invest in your child’s future with 529 College Savings Plans.

With a 529 plan, saving for your child’s college education is easier than you think, and the sooner you start, the better.

It’s never too early or too late to start saving for college. And now, up to $10,000 per year, per beneficiary, may also be used for tuition expenses at a private, public or religious elementary or secondary school.

Investing early and regularly in a 529 plan may provide the potential for long term growth. How?

Explore our interactive tool to see for yourself!

So, you’re probably wondering: Why is it called a 529 Plan?

A 529 plan is a tax-advantaged savings plan designed to encourage saving for the future higher education expenses of a beneficiary. This beneficiary is typically one's child or grandchild, but there does not need to be a family relationship. The plans are named after Section 529 of the Internal Revenue Code.

There are two different types of 529 plans: investment plans and prepaid tuition plans.

How do the plans differ?

Investment plans allow you to invest in a variety of investment options (or portfolios) which typically include varying combinations of mutual funds. You can decide how much you want to invest or contribute, how often, and in what type of portfolio. Savings in this type of 529 plan can be used for a variety of education expenses including tuition, fees, room and board, course-specific fees, books and other supplies.

Prepaid tuition plans are 529 plans that allow for the pre-purchase of tuition based on a current price. One of the main benefits of 529 prepaid tuition plans is that they allow you to hedge against future tuition increases. These accounts are primarily designed to be used towards tuition and mandatory fees. In Maryland, the Prepaid College Trust is generally designed to cover tuition and mandatory fees at a Maryland public college, but accounts can also be applied towards private or out of state colleges. However, other states may a have different structure for their prepaid tuition plans.

Saving with a 529 plan has a number of benefits:
  • It’s affordable. Initial investment options can fit most family budgets.
  • It’s flexible. With an investment plan it’s up to you how often and how much to invest within the broad limits of the plan. A prepaid tuition plan offers a variety of tuition plans and payment options to help you participate within your budget.
  • It offers tax benefits on the State and federal level.
  • Beneficiaries are still eligible for financial aid.
  • You can use it at nearly any college nationwide.

The availability of tax or other benefits may be conditioned on meeting certain requirements such as residency, purpose for or timing of distributions, or other factors as applicable.

Save here. Go anywhere!

Saving for college with a Maryland 529 plan doesn’t mean your child has to attend college in the state of Maryland.

  • You can use a 529 investment plan or prepaid tuition plan at almost any accredited college around the country: public or private, two-year or four-year. You can even use a 529 plan at colleges located outside of the U.S. provided they are either part of an affiliated U.S. based college or have received U.S. accreditation.
  • 529 investment plan savings can even be used towards eligible trade and technical schools.
  • The 2017 tax reform measures expanded the use of 529 college savings plans to save for tuition expenses at K-12 private, public, and religious schools. Learn more about using a Maryland College Investment Plan account to save for K-12.

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