Kickstart Your Little One’s College Savings

By Michael Hollis

Explaining the Illinois First Steps Program

Is your kid attending college a significant value you have? Is funding your kid’s college important to you? As an aside, you know, it’s not a sin to let your kids pay for some or all of college. That being said, this is a strong value that clients frequently have, so why not jump-start your goal to fully fund college? The Illinois First Steps Program is meant to do that. While it’s not going to get you far, it’s an incentive to get you going. More on the program in a minute.

To take a personal detour, I didn’t take advantage of college savings vehicles when I was a younger parent because I thought we couldn’t afford it and maybe my kids wouldn’t go to college anyway. “We’ll figure it out when we get there,” was my thought. I think I was naive about the exponentially rising cost of college and didn’t have the same aversion to debt that I now have. If you want to be a part of setting your college student up to avoid the noose of student debt when they graduate, starting sooner rather than later is the best plan. I’ve met too many who have student debt, sometimes substantial student debt, and it causes all kinds of stress (financial, emotional, relational, etc.). Plus, it gets in the way of your life after college plans, like buying a house, pursuing a passionate mission, getting married, and having a family. So, whatever you do, whether you take advantage of the Illinois First Step Program or not, take student debt off the table for you and your aspiring college student. I know when they get to the end of their college education journey, they’ll be glad you did. If you want to talk college funding alternatives, we’ve got a slew of good ideas, so book an appointment with us if student loans have been taken off the list of options and you need some impetus.

So, off my soap box now, and on to giving you the low down about this program. Illinois First Step is a program that went into effect on January 1, 2023, for all those born or adopted after that date who live in Illinois. It provides a one-time kick-start $50 contribution from the state of Illinois to a 529 College Savings Plan. This certainly won’t get the college funding job done on its own. Invested over 18 years, that $50 will produce a whopping $300 with a 10% return. But let’s not look a gift horse in the mouth. It’s just a little kick to get you going. If you add just $100/mo. for that same time period, you’d have $60,000 by the time your student reaches 18! For us, we’ve decided our family is going to fund up to $40,000 for each of our kids, so we’d have eclipsed that mark if we had started earlier. Now, we’re having to put a larger chunk towards education savings to reach our goal. I guess the lesson there is that it’s never too late to start.

Here’s how you can take advantage of the program. First, open a Bright Start account if you want to DIY it, or get with us to set up an advisor-managed version called Bright Directions. The investment options are the same either way, and they are both Illinois’ version of the 529, which is one prerequisite to getting the seed money into the account. During the enrollment process, you’ll submit a claim for the cash, and within 60 – 90 days, the funds will be in the account, ready to invest. One little twist is that you have to act before their 10th birthday. That’s it? Yep, that’s it.

We’ve written some other articles that I think you’ll find interesting if you want to learn more about 529 plans and other college funding vehicles. Check these out below.

How 529 Plans Are Becoming, Even More, User-Friendly In 2024 via the SECURE Act 2.0

College Savings Options

As always, we are here to serve your financial planning needs. We are passionate about helping you reach your goals. Contact us today to explore more about what we offer.