Education
Invest in education and 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.
From big dreams to graduation day, we're with you every step of the way.
Define your savings goals.
The earlier you start investing the better. Tuition costs vary based on school and degree and are projected to rise. We take an approach informed by JP Morgan Research and an understanding of your goals, to help you understand what it will take to get there.
Projected cost of a four-year college education1
Private (in 2020)
Public (in 2020)
Things to consider as you're planning.
understand the costs
On average, tuition costs are increasing by 6.3% every year1 — the earlier you start investing, the better.
get real with financial aid
Only 0.3% of college and university students are fully covered by scholarships and grants.1
don't just save, invest
The right investment strategy can help your money grow faster so you can reach your education goals.
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.
529 plan
A tax-advantaged investment product for education that has a low impact on financial-aid eligibility.3
BENEFITS
- 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
- May be applied to K-12 tuition, vocational school, registered apprenticeships, college, graduate school and student loans
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
UTMA/UGMA
Custodial accounts that can be used for a child's general benefit, but have a high impact on financial-aid eligibility.
BENEFITS
- The UGMA (Uniform Gift to Minor's Act) and UTMA (Uniform Transfer to Minor's Act) are custodial accounts that can be used for a child's general benefit, not just education
- Assets in these accounts can be invested in any manner the custodian thoughtfully chooses
DISADVANTAGES
- Custodial accounts are assets of the student, which means they can have a high impact on financial aid eligibility
- Custodian must turn the assets over when the owner reaches the age of majority
- Using annual exclusion gifts to fund an UTMA account may preclude use of the annual exclusion amount for other purposes
- Typically subject to income tax at the beneficiary's parents' tax rate
Coverdell/ESA
A tax-free account that can be used for any level of education and has a low impact on financial-aid eligibility.
BENEFITS
- Earnings in Coverdell Education Savings Accounts accrue free of income tax
- Distributions may be made free of income tax (as long as they are 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
- Contributions must be made before the beneficiary reaches age 18
Financial Aid
Each type of financial aid – grants, scholarships, and federal student loans – have different pros and cons.
BENEFITS
- Often, grants and scholarships do not have to be paid back
- Federal student loans are easy to apply for, 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 education4
- 34% of financial aid is disbursed through federal loans that need to be paid back with interest5
- Today, a record 4 in 10 households owe student loan debt6
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.
The Benefits of a 529 Plan1
Account growth over 18 years*
Savings account
529 plan
*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.
"We have an obligation to give our kids as much opportunity as we possibly can."
Nahid & Farzana
JP Morgan Wealth Management Clients
Learn from our experts.
Browse the latest commentary, news, and education from JP Morgan specialists to help you make the most of your investments.
Get the latest from Michael Conrath.
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.
Still have questions?
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Yes. Both options offer federal tax-free education investing as long as the money is spent on qualified higher-education expenses such as tuition, fees, books, and room and board.
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