Volume 5, Number 1
the Costs of College--Missouri College Savings Plan
Sandra McKinnon, M.S.
Financial Education Specialist
University of Missouri Extension
undergraduate degree could cost almost $220,000 at a public
university by 2022, according to T. Rowe Price, an investment
management firm. That is a daunting amount.
As a relative caregiver, you may have considered helping children
with college expenses. One of the most common college savings
options is a 529 plan. 529 plans are a tax-advantaged investment
vehicle that can be used by a designated beneficiary at nearly every
U.S. college or graduate school.
In Missouri, the 529 plan is called MOST (Missouri Saving for
Tuition). Any U.S. citizen can open one or more accounts for any
future student with just $25. Enrollment is free though there may be
a fee to manage the account. Once the account is opened, anyone can
contribute to it. The account can be used to pay for tuition,
mandatory books, fees, certain room and board expenses and supplies
at any eligible postsecondary school in the U.S. and abroad.
The MOST plan features significant benefits for Missouri taxpayers -
State income tax
deduction of up to $8,000 per year ($16,000 if married filing
jointly) for the owner of the account.
can grow free from federal and Missouri income tax until
The earnings are
tax-free when used to pay for qualified higher education
expenses. If the funds are withdrawn and used for anything other
than these expenses, then taxes and penalties may apply.
Control of the
Relative caregivers may worry about the account if they are no
longer a child’s guardian or
custodian. However, the owner remains in control of the account no
matter where the child resides.
There is also no need to worry about others accessing the money in
the 529 account. Only the
account owner can withdraw the funds.
If a beneficiary doesn’t go to college, the account owner can change
the beneficiary or defer withdrawals if the beneficiary attends
Possible affects on eligibility
If a relative caregiver is on Medicaid, they should proceed with
caution before starting a 529 plan. The effect of an account on
eligibility for Medicaid and other state and federal benefits is
uncertain. It is possible that an account will be viewed as a
“countable resource” in determining an individual’s financial
eligibility for Medicaid. Withdrawals from an account
during certain periods also may have the effect of delaying the
disbursement of Medicaid payments.
The account does not affect a student’s eligibility for merit-based
financial aid; however, it may affect the student’s eligibility to
receive need-based financial aid.
For more information about the MOST plan, visit http://Missouri
call toll-free 800-868-3585.
For more information about financial aid, including calculators to
project college costs and how much to save, visit www.finaid.org.
One last word of financial advice – a caregiver should take care of
their own financial planning first and not sacrifice their
retirement for a child’s college education. There are no
scholarships to subsidize retirement.