Future Scholar’s Flexibility: More Reasons to Love South Carolina’s 529 College Savings Plan

“The best time to begin saving is now. Once you’ve started, the key to successful saving is consistency,” says South Carolina Treasurer Curtis Loftis.

That’s sound financial advice. Smart parents who want to follow it may have some practical questions about college savings: How do I know what my children will want at age 18? What if their plans for college change?

The built-in flexibility of Future Scholar allows you to save today knowing the money you’re contributing can benefit your family no matter what path your child chooses to follow in the years to come.

Many ways to spend

Future Scholar flexibility gives you many ways to spend your funds. Perhaps your child wants to be a chef - or a welder - or a microbiologist. The choices are endless. That’s why Future Scholar savings can be used at two- or four-year universities, technical colleges, graduate or professional schools, or apprenticeships all across the U.S and internationally.

Future Scholar savings can also pay for more than college tuition. You may choose to use your funds to pay for necessary expenses such as books, housing, meal plans, computers, and a number of other qualified education-related needs. Families can even withdraw up to $10,000 a year to cover K-12 tuition.

Multiple tax benefits

Saving with Future Scholar comes with tax perks, too. Contributions to your plan can be deducted on your South Carolina state income tax return, giving you the flexibility to lower your tax bill. Additionally, any interest growth over the life of the plan is tax-free, as long as funds are used for qualified education expenses.

You can even choose to frontload a Future Scholar account and receive an exception to the Gift Tax limitation. With frontloading, you’re able to make the equivalent of a five-year maximum contribution in a single year – with no gift tax. Perhaps you’ve received a large sum of money, such as an inheritance. If so, you can deposit up to $75,000 – your 5-year maximum contribution - at one time into a Future Scholar account.

Options to match your needs

What if your child doesn’t use all of the 529 savings? You have options. You can transfer your funds to another eligible family member. Savings can also be used to repay up to $10,000 in education loans for the beneficiary or the beneficiary’s siblings. And adults can save for their own education—to get a new degree or go back to school—with a Future Scholar account.

You’ll find your investment strategy is flexible, too. Account owners can choose how their money is managed and change their investment plans.

Maximized for financial aid and scholarships

You’ll find that Future Scholar savings have a minimal impact on financial aid eligibility. A 529 plan is treated as the parent's or account owner's asset, not the child’s, in determining eligibility for federal financial aid. Only 5.64% - or less - of the account's value is factored in when determining expected family contribution each academic year.

If a Future Scholar beneficiary receives a scholarship, families have even more reason to celebrate! The amount of the scholarship can be withdrawn without penalty and used for any purpose. The beneficiary only has to pay income tax on any interest earned on that amount.

Review your college savings plan now

Anyone can open and manage a Future Scholar account online. If you already have an account, think about adding or increasing monthly automated deposits. And if you’ve received a child tax credit or income tax refund, consider contributing part of the money to a Future Scholar account, too.

“We’ve worked hard to make Future Scholar accessible and flexible for you and your family,” said Loftis. “The professionals at the State Treasurer’s Office take pride in administering South Carolina’s 529 plan and always have your interests at heart.”