Financial Advisors Bust Five Common College Planning Myths

As Maine’s professional financial advisor community informs clients about Maine’s NextGen College Investing Plan®, they often find that they are busting some common myths about the state’s 529 plan too. Here, two financial representatives set the record straight.

Myth: NextGen is just for babies. “Most people with whom I speak think that NextGen® is only for people with babies and if they don’t sign up in the first year that’s it, that there is no opportunity for those with older children,” said Mary Ann Tudor, a financial advisor with Modern Woodmen of America in Lincoln, Maine. That couldn’t be further from the truth! NextGen encourages families to open an account for their children no matter what age, until they are college ready.

Myth: I can’t contribute enough to help. “I tell people, anything you can do prior to starting college will be less debt your child may have to incur. Anything you can contribute is helpful,” said Ms. Tudor.

In addition, NextGen offers over $1,000 in grants for each eligible account to put toward qualified college expenses.

“I do a lot of education on how NextGen works, telling people about the mechanics of it. But few know about the matching grants above and beyond the one for the initial opening contribution,” adds Ken Nott, a Certified Financial Planner with the Hallowell based Duncklee and Nott. The grants are:

  • A one-time $200 Initial Matching Grant is available to eligible Maine accounts opened with at least $25 in the Client Direct Series, or $50 in the Client Select Series (advisor sold). This grant is not available to babies who are eligible for the Harold Alfond College Challenge Grant.
  • The NextStep Matching Grant provides eligible Maine accounts with a fifty percent match on contributions, up to $100 match per year, with a lifetime maximum of $1,000.
  • A $50 Automated Funding Grant is available for eligible Maine accounts that make at least six consecutive automated contributions through an automated funding option.

“I don’t know many places that you can put money where somebody else is going to contribute on your child’s behalf like NextGen does,” Ms. Tudor adds.

Myth: There are income limits for who is eligible for receiving grants. Mr. Nott says while initially the grants had income restrictions, they have been eliminated. Today grants are available to every eligible Maine resident that is an account holder regardless of the account holder’s income.

Myth: Only parents can contribute to NextGen® “Parents love it when I tell them it’s not just the account owners who can contribute. Papa and Meme, Grammy and Grampy – whoever wants to contribute to their loved ones’ future higher education may contribute,” Ms. Tudor said.

Mr. Nott adds, “I find grandparents to be committed to ensuring a bright future for their grandkids. They are sometimes in a position to be very generous.”

His practice has a plan to communicate with parents and grandparents, reminding them of the benefits of NextGen once he learns a baby is on the way, and continues to encourage grandparents to contribute to the account over the years as an annual birthday present.

NextGen Investment Plan Options
NextGen offers the Client Select Series and the Client Direct Series, each with different investment options and expenses.

The NextGen Client Direct Series is available for self-directed investors – those who do not seek professional advice about choosing among the available NextGen investment portfolios.

Visit www.FAMEmaine.com/NextGen to learn more.

The NextGen Client Select Series is available for those investors seeking professional advice from a financial advisor and offers a broader choice of investment options than offered in the Client Direct Series, with a different expense structure. Client Select Series enrollment materials are available through Merrill Lynch financial advisors and certain other financial advisors that are authorized to sell NextGen. Visit www.FAMEmaine.com/NextGen to learn more about Maine Distribution Agents.

About NextGen®
Grants are awarded to a NextGen account. See Terms and Conditions of Maine Grant Programs for other conditions and restrictions that apply at www.FAMEmaine.com/NextGen. NextGen is a Section 529 plan administered by the Finance Authority of Maine (FAME). Before you invest in NextGen, request a NextGen Program Description from your Maine bank or financial advisor, or call FAME at 1-800-228-3734 and read it carefully. The Program Description contains more complete information, including investment objectives, charges, expenses and risks of investing in NextGen, which you should carefully consider before investing. You also should consider whether your or your designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s 529 plan. Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered broker-dealer, member SIPC, is the program manager and underwriter.

Recommend this article
christengraham

About christengraham

President of Giving Strong, Inc. Christen advises businesses, foundations and families for how to make a greater social impact.