“If I use CollegeAdvantage, does my child have to attend an Ohio college?”
This is one of the most frequent questions we hear. Many people think that if they save with CollegeAdvantage that their child must attend an Ohio college or university in order to use the funds. That’s FALSE!
Simply put: You can use your 529 account for expenses at nearly any public or private, two-year or four-year college nationwide! The institution must be a U.S. accredited college, university, graduate school, or technical school. That is, the institution is eligible to participate in U.S. Department of Education student financial aid programs. A school is eligible if they have a Federal School Code, which can be searched at FAFSA.
In spite of this fact, sometimes the myth remains. Here are some reasons why this misunderstanding may still exist:
When the Ohio Tuition Trust Authority (OTTA) was established in 1989, it offered a prepaid tuition plan backed by the full faith and credit of the state of Ohio. The cost of the units available for purchase was based on the Weighted Average Tuition (WAT) of Ohio’s 13 public, four-year colleges and universities. CollegeAdvantage has always allowed families to use the value of their units at any accredited college in the nation. However, because the value of the units or credits at the time of withdrawal was based on the WAT of Ohio schools, the value withdrawn might not have covered as much at a non-Ohio school. The Guaranteed 529 Savings Plan closed in 2004 to new enrollments and contributions. However, families still withdraw their funds to pay their students’ expenses at colleges and universities across the country.
In 2000, OTTA launched the CollegeAdvantage 529 Plan and began offering variable mutual fund investments for college savings accounts. This was the start of the CollegeAdvantage Direct 529 Savings Plan and the CollegeAdvantage Advisor 529 Savings Plan offered by BlackRock. These product offerings allow account owners to be selective about their investments and portfolios based on their personal risk tolerances, desired earnings potential, and savings goals. Yet, this major shift in the college savings product offerings still didn’t end the myth of Ohio-only schools.
Although families from across the country choose CollegeAdvantage because of our investment options, performance, and low fees, 75% of all Direct Plan accounts, and 37% of all Advisor Plan accounts, are owned by Ohioans. The main reason for this is that only Ohio taxpayers are eligible to take advantage of the state of Ohio $2,000 income tax deduction for contributions to CollegeAdvantage accounts. Tax-free earnings and the state of Ohio tax deduction are great reasons for Ohioans to open a CollegeAdvantage account.
The truth is that no matter where you live, when you save with CollegeAdvantage, your children can choose the school of their dreams. CollegeAdvantage can be used at any 529-eligible college or university in the nation!
