States that offer 529 plan grant programs
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By Kathryn Flynn

January 12, 2021

How does free money for college sound?

Fifteen states make it easier to save for college by offering grants to residents who use their 529 plans. Some states provide matching grants for 529 plan contributions and others seed new 529 plan accounts with an initial contribution.

Why do states offer matching grants?

Studies show that children with even small amounts of college savings are more likely to enroll in and graduate from college. States provide incentives such as state income tax deductions and credits and grants programs to increase enrollment and participation in their 529 plans.

How do 529 plan grants work?

There are different rules for each state’s 529 plan grant program. Some states offer matching grants for 529 plan contributions.

Matching grants work similar to an employer 401(k) match, where the state matches contributions, or a portion of contributions, up to a specified amount.

Some grants can only be claimed once, while others may be available to residents each year until a cap is reached.

For example, Colorado’s CollegeInvest Matching Grant Program matches contributions to a CollegeInvest 529 plan up to $500 each year for up to five years. However, only lower to middle income families who have an adjusted gross income (AGI) below certain limits based on federal poverty guidelines may qualify for the grant. Limits are adjusted by household size.

Although a 529 plan beneficiary can be any age, many states’ 529 plan grant programs are limited to children or babies. States want to encourage residents to start saving in a 529 plan as early as possible to take advantage of the tax-free compounding. Investments in a 529 plan grow on a tax-deferred basis, and distributions are tax-free when the funds are used to pay for qualified college or K-12 expenses.

What if your state doesn’t offer a matching grant?

Your state may offer other incentives, such as a state income tax deduction or credit for 529 plan contributions or an employer 529 plan match, that can help boost your college savings.

However, a 529 plan grant or state income tax benefit should not be the only consideration when selecting a 529 plan. High fees and poor investment performance can diminish savings and outweigh the benefits of other incentives. Families should also carefully review the 529 plan to make sure it offers suitable investment options that will help them meet their college savings goals.

Another option to boost 529 plan savings is to sign up for a free Upromise account and use the Upromise Mastercard. Upromise members can earn around 3% – 7% cash bask on purchases from participating online retailers and 2.5% cash back from dining at participating restaurants. All purchases made with the Upromise Mastercard earn an additional 1.25% cash back, with the option to “Round Up” purchases to the nearest dollar to earn even more rewards. Cash back and Round Up rewards earn an additional 15% bonus when an eligible 529 plan is linked to the account. 

Check out our slideshow to see which states offer free money for college, how much they are giving and who is eligible.

California

State: California

Eligible 529 Plans: ScholarShare 529

529 Plan Grant: The ScholarShare 529 Matching Grant Program matches contributions dollar for dollar, up to $200; plus an additional $25 when enrolled in automatic contribution plan.

Age Limits: Beneficiary must be 14 years or younger on December 31.

Income Restrictions: Household annual AGI must be $75,000 or less.

Colorado

State: Colorado

Eligible 529 Plans: CollegeInvest Direct Portfolio College Savings PlanCollegeInvest Stable Value Plus College Savings Program and Smart Choice College Savings Plan

529 Plan Grant: The CollegeInvest Matching Grant Program matches contributions up to $500 each year for up to 5 years.

Age Limits: Beneficiary must be 8 years old or younger at the time of the initial application.

Income Restrictions: Household annual AGI must be 400% or less of the federal poverty guidelines based on family size.

Connecticut

State: Connecticut

Eligible 529 Plans: Connecticut Higher Education Trust (CHET) and Connecticut Higher Education Trust (CHET) — Advisor Plan

529 Plan Grant: CHET Baby Scholars provides 529 plan accounts with $100. If at least $150 in contributions are made before the child turns 4, there will be an additional $150 match.

Age Limits: Beneficiary must be 1 year old or younger, or have been adopted within one year.

Income Restrictions: None

Illinois

State: Illinois

Eligible 529 Plans: Bright Start Direct-Sold College Savings Program

529 Plan Grant: Illinois will automatically deposit a $50 seed deposit into a 529 college savings account for every child born or adopted in the state beginning in 2021.

Age Limits: Parents must claim the college savings account for their child before the child’s 10th birthday. 

Income Restrictions: None

Connecticut

State: Kansas

Eligible 529 Plans: Learning Quest 529 Education Savings Program (Direct-Sold) and Learning Quest Advisor

529 Plan Grant: The K.I.D.S. Matching Grant Program is based on eligible contributions during the previous year up to $600.

Age Limits: None

Income Restrictions: Household annual AGI must be less than 200% of the federal poverty guidelines based on family size.

Louisiana

State: Louisiana

Eligible 529 Plans: START Saving Program

529 Plan Grant: The state matches up to 14% of contributions.

Age Limits: None

Income Restrictions: Yes, earnings enhancement rate is determined by household income.

Maine

State: Maine

Eligible 529 Plans: NexGen 529 — Client Direct SeriesNextGen 529 — Client Select Series

529 Plan Grant: New Maine accounts are eligible to receive an Initial Matching Grant when the account is opened and funded with at least $25. The NextStep Matching Grant provides a 30% match on contributions up to a $300 grant per year. A $100 Automated Funding Grant is available for accounts that make six consecutive contributions, no less frequently than quarterly, through an automated funding option. 

Age Limits: None

Income Restrictions: None

Maryland

State: Maryland

Eligible 529 Plans: Maryland College Investment Plan

529 Plan Grant: The Save4College State Contribution Program offers $250 or $500, depending on amount of 529 plan contribution and household taxable income. The program is available to new Maryland College Investment Plan account owners and current account owners who opened their account after December 31, 2016. 

Age Limits: None

Income Restrictions: Yes, state contribution amount is determined by household taxable income. Maximum household income cannot exceed $112,000 ($175,000 for married filing jointly).

Massachusetts

State: Massachusetts

Eligible 529 Plans: U.Fund College Investing Plan

529 Plan Grant: Every baby born or adopted by a Massachusetts resident is eligible for a $50 seed deposit into a U.Fund College Investing Plan account, as part of the state’s BabySteps Savings Plan.

Age Limits: Must enroll in the BabySteps Savings Plan before the child’s first birthday or within one year of adoption.

Income Restrictions: None

Nevada

State: Nevada

Eligible 529 Plans: SSgA Upromise

529 Plan Grant: The Silver State Matching Grant Program matches contributions to the SSgA Upromise 529 account dollar-for-dollar, up to $300 per year, with a lifetime maximum of $1,500 over 5 years for a beneficiary.

Age Limits: Beneficiary must be 13 or younger as of December 31 of the year the account owner first applies for the matching grant.

Income Restrictions: Household adjusted gross income must not exceed $74,999.

Nevada’s USAA 529 College Savings Plan also offers the USAA 529 Distinguished Valor Matching Grant Program for military families and their children. 

North Dakota

State: North Dakota

Eligible 529 Plans: College SAVE (Direct), College SAVE (Advisor)

529 Plan Grant: The BND Match program matches up to $300 in 529 plan contributions who meet the income criteria listed below; the Kindergarten Kickoff Match matches up to $100; the New Baby Match matches up to $200 in contributions. 

Age Limits: Beneficiary must be 15 years old or younger, for BND Match; 5 or 6 years old for the Kindergarten Kickoff Match; 12 months or younger for New Baby Match.

Income Restrictions: To qualify for the BND Match, AGI must be less than $80,000 (single filers) or less than $120,000 (married filing jointly).

Oregon

State: Oregon

Eligible 529 Plans: Oregon College Savings Plan 

529 Plan Grant: The Oregon Baby Grad Program provides one-time $25 seed contribution to families that open an Oregon College Savings Plan by the child’s first birthday. The Kinder Grad program provides a $25 seed contribution for new 529 plans opened for Oregon kindergarten students. Under the Oregon Scholars Program, partnering universities reward Oregon students by offering additional cost savings when attending their schools.

Age Limits: Beneficiary must be under one year old for the Baby Grad Program, or 5 or 6 years old for the Kinder Grad program.

Income Restrictions: None

Rhode Island

State: Rhode Island

Eligible 529 Plans: CollegeBound Saver (Direct-Sold) and CollegeBound 529 (Advisor-Sold)

529 Plan Grant: CollegeBoundbaby offers a one-time $100 grant to every baby born in Rhode Island or adopted by Rhode Island residents.

Age Limits: Must enroll before the child’s first birthday or within one year of adoption.

Income Restrictions: None

Tennessee

State: Tennessee

Eligible 529 Plans: TNStars College Savings 529 Program

529 Plan Grant: The Tennessee Investments Preparing Scholars (TIPS) Program provides $100 for every $25 contributed, with a maximum $500 match per year for up to three years.

Age Limits: Beneficiary must be 15 years old or younger at the time of application.

Income Restrictions: Household annual AGI must be less than 250% of the federal poverty guidelines based on family size.

West Virginia

State: West Virginia

Eligible 529 Plans: SMART529 WV Direct College Savings
Plan
, SMART529 Select

529 Plan Grant: With the Bright Babies program, a $100 contribution is made to all new West Virginia SMART529 accounts.

Age Limits: Must enroll before the child’s first birthday or within one year of adoption.

Income Restrictions: None

At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

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