The person identified on the Account Application as the beneficiary of the Account whose Qualified Higher Education Expenses will be paid from the Account.
529 College Savings Plan
These state-sponsored college savings plans were established by the federal government in Section 529 of the Internal Revenue Code to encourage families to save more for college. They have important benefits you can't get from other savings plans, making them one of the best ways to save for college. There are two types of 529 plans: prepaid tuition plans and college savings plans.
529 Eligible Educational Institutions
To be an Eligible Educational Institution for purposes of Section 529, an institution must be eligible to participate in certain U.S. Department of Education student financial aid programs. Eligible Educational Institutions include accredited postsecondary educational institutions in the United States or abroad offering credit toward an associate's degree, a bachelor's degree, a graduate-level or professional degree, or another recognized postsecondary credential, and certain postsecondary vocational and proprietary institutions.
When used in reference to a 529 plan, account means your individual College Savings account to which the money you contribute will be allocated. You may open more than one Account for the same Student.
When used in reference to a 529 plan, refers to the Direct Portfolio College Savings Plan, Stable Value Plus College Savings Plan or Scholars Choice College Saving Program Account Application.
Account Owner (also known as, participant)
The person who establishes the account and controls the assets held in it on behalf of a beneficiary.
An accredited school is a school that is eligible to participate in certain federal student aid programs. This might be a college or graduate school, or a vocational or trade school. Most major colleges and universities are accredited.
Administration or Administrative Fee
A charge for expenses incurred in the administration of a 529 college savings plan, which may include services such as record keeping, auditing, and preparing and printing statements and reports. This fee is deducted from your holdings based on a percentage of your assets in the plan. You can find a description of the fees and expenses charged by a plan in the disclosure statement or plan description.
Age of Majority
The age of majority is the age at which an individual is considered an adult and responsible for their actions in the legal sense. The age of majority varies from state to state in the United States, and in other countries. Usually the age of majority is 18 or 19.
Age-Based Fund Portfolios
College savings plan portfolios that change their asset allocation according to the beneficiary’s age. Initially age-based portfolios invest primarily in stock funds. As the beneficiary grows older, the stock funds are replaced by more conservative investments such as bond funds.
Annual Maintenance Fee
Most 529 college savings plans charge annual maintenance fees. These fees usually range from $10 to $50. Many plans reduce or eliminate this fee for residents, if you make automatic contributions, or if you maintain a certain balance, typically $25,000.
Annual Rate of Return
The rate of return on your investment, expressed as a percentage of the total amount invested.
An item with economic value that an individual or organization owns, such as stocks, real estate, personal property, and business equipment.
A strategy for maximizing gains while minimizing risks in your investment portfolio. Asset allocation involves dividing your assets on a percentage basis among different broad categories of investments, including stocks, bonds, and cash.
Automatic Investment Plan (AIP)
Allows you to contribute to your 529 plan account through regular automatic debits from a checking or savings account.
Beneficiary or Student
The person you identify on the Account Application as the beneficiary of the Account whose Qualified Higher Education Expenses will be paid from the Account.
Mutual funds that invests in bonds. Some bond funds may focus primarily on short-term, intermediate-term and long-term maturities. Also known as fixed-investment funds.
Certificate of Deposit
A certificate from a bank stating that the individual has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.
A single 529 college savings plan or mutual fund may offer more than one "class" of shares to investors. Each class represents a similar interest in the plan’s or fund’s portfolio, but has different fees and expenses. Here are the basic definitions of Class A, B, and C shares:
• Class A Shares - These shares typically charge a front-end sales charge that is deducted from the initial investment.
• Class B Shares - These shares typically do not charge a front-end sales charge. So, unlike Class A shares, all your money is immediately invested. Class B shares normally impose a contingent deferred sales charge (CDSC). The CDSC normally declines each year and is eliminated after a number of years. Class B shares often then "convert" into Class A shares. When they convert, they will begin to charge the same annual fund operating expenses as Class A shares. Before they convert, Class B shares usually have higher annual fund operating expenses than Class A shares.
• Class C Shares - These shares typically do not charge a front-end sales charge. So, unlike Class A shares, all your money is immediately invested. Often Class C shares impose a small charge if you sell your shares within a short time of purchase, usually one year. Class C shares also typically impose higher annual fund operating expenses than Class A share
A nonprofit educational association of colleges, universities, educational systems and other educational institutions. For more information, see College Board Online (CBO).
Free money offered by the school to meet the student’s need, reward merit or both.
CollegeInvest, a not-for-profit division of the Colorado Department of Higher Education. CollegeInvest is the administrator of the Direct Portfolio College Savings Plan, the Scholars Choice College Savings Program, the Smart Choice College Savings Plan, and the Stable Value Plus College Savings Plan.
CollegeInvest 529 College Savings Program Fund Managers
Refers to the financial institution selected by CollegeInvest to provide services in connection with each college savings plan.
CollegeInvest 529 College Savings Program Policy Statement
The Investment Policy Statement established by CollegeInvest. The Policy Statement sets forth the policies, objectives and guidelines that govern the investment of Trust assets.
A fee to a third party for assisting a business transaction, such as buying or selling an asset.
Interest credited daily, monthly, quarterly, semi-annually, or annually on both principal and previously credited interest.
Calculating interest on both principal and previously earned interest.
The money that you invest in a 529 plan.
Cost of Attendance (COA)
The total cost of attending a particular college, including tuition and mandatory fees, room and board, books and supplies, transportation, and personal and miscellaneous expenses. Some schools omit certain costs, such as transportation and personal expenses, from the total, resulting in a lower estimate of need.
Coverdell Education Savings Accounts (ESAs)
A Coverdell ESA is a trust or custodial Account created for the purpose of paying the qualified education expenses of the designated beneficiary of the Account. A College savings plan in which contributions grow on a tax-deferred basis and withdrawals are tax-free if used to pay for a broad range of educational expenses, including private high school tuition. Unlike 529 plans, ESAs have annual contribution limits and income restrictions.
Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts, created for the benefit of a child. An adult controls the funds until the child reaches the age of majority, at which point the account transfers into the child’s name.
If a student's parents are divorced or separated, the custodial parent is the one with whom the student lived the most during the past 12 months. The student's need analysis is based on financial information supplied by the custodial parent.
The adult who has control over a custodial account.
Direct-Sold and Broker-Sold Plans
• "Direct-Sold College Savings Plans"- You buy an interest in the college saving plan directly from a
broker-dealer on behalf of the state, the state that sponsors the plan, or from the plan's program
manager, with no sales person involved.
• "Broker-Sold College Savings Plans" - You buy an interest in a college saving plan through an invest-
ment adviser, brokerage firm, or bank, generally paying a sales load or fee. Purchasing through
a broker, you may be able to reduce the front-end load for purchasing Class A shares if you invest
above certain threshold amounts (breakpoint discounts).
Disclosure Statement or Plan Description
Similar to a mutual fund’s prospectus, a 529 college savings plan’s disclosure statement or plan description (these terms are interchangeable) provides detailed information about the plan, including investment options and fees and expenses. You can find the disclosure statement or plan description on the 529 plan’s Web site, where it is usually in a downloadable PDF-format. On some fund Web sites, you must first click on “start to enroll” to get to a downloadable disclosure statement or plan description link.
See Coverdell Education Savings Account (CESA or ESA).
Expected Family Contribution - The number that's used to determine your eligibility for Federal student financial aid and the amount of aid that you will receive. This number results from the financial information you provided on the FAFSA.
Electronic funds transfer (EFT)
A computer-based process in which money is transferred from one account to another. The money is transferred electronically instead of using paper. EBT"electronic bank transfer is a transfer of money from a bank account to another account
Eligible Educational Institution
An institution must be eligible in order to use the assets of a 529 plan account without incurring tax penalties. Generally, a post-secondary institution that offers credit toward a degree or credential. Certain trade and vocational institutions also qualify. An institution must be eligible to participate in Federal Financial Assistance under Title IV of the Higher Education Act of 1965. Visit www.savingforcollege.com/eligible_institutions/ to for eligible schools.
Compensation that an employee receives in addition to a wage or salary. Examples include health insurance, life insurance, childcare, and subsidized meals.
Employer-sponsored retirement savings plan
A government-approved program through which an employer can assist workers in building their personal retirement funds. Tax-deferred investment programs, such as 401(k) plans for corporate employees and Section 457 plans for state and local government employees, which provide, in some cases, employer matching funds.
Employer-Sponsored Savings Plan
A government-approved program through which an employer can assist workers in building their personal retirement funds.
The assets and debts that a person leaves at death.
Exchange-Traded Fund (ETF)
A type of investment, traded on exchanges, which combines features of mutual funds, stocks, and bonds. ETFs are often funds that, like index mutual funds, represent portfolios of securities (like stocks or bonds) that track specific indexes. A 529 portfolio can be invested in ETFs, but it is not itself an ETF.
Expected Family Contribution (EFC)
The number that's used to determine your eligibility for Federal student financial aid and the amount of aid that you will receive. This number results from the financial information you provided on the FAFSA.
A member of the family" of a beneficiary is a person related to that beneficiary as follows: father, mother or ancestor of either; son, daughter, or ancestor of either; stepfather or stepmother; stepson or stepdaughter; brother, sister, stepbrother, stepsister, half-brother, half-sister; brother of sister of the father or mother; brother-, sister-, son-, daughter-, father-, or mother-in-law; son or daughter of a brother or sister; spouse of any of the above; or first cousin. A legally adopted child of an individual is treated as the child of this individual by blood.
Federal Deposit Insurance Corporation (FDIC)
A federal agency that insures deposits in banks.
A person who provides financial information and advice. Examples include employee benefits staff, bank and credit union employees, credit counselors, brokers, financial planners, accountants, insurance agents, and attorneys.
Money provided to the student and the family to help them pay for the student's education or which is conditioned on the student's attendance at an educational institution. Major forms of financial aid include gift aid (grants and scholarships) and self-help aid (loans and work).
Financial Aid Administrator (FAA)
A college or university employee who is involved in the administration of financial aid. Some schools call FAAs Financial Aid Advisors" or "Financial Aid Counselors"."
Free Application for Federal Student Aid (FAFSA)
The first step in getting aid for college, this free application will ask for demographic and financial information to determine the family EFC. Colleges use the results of the FAFSA to award aid.
Refers to a financial institution selected to provide services in connection with investment plans.
A tax assessed against a person who gives money or assets to another person without receiving fair compensation.
A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover and is a form of passive investing.
Individual Account Application
This is the Account application typically used by an individual (parent, grandparent, family member or friend). Download the Individual Account application (PDF)."
A type of static asset investment vehicle used in 529 plans. You can generally create your own diversified portfolio from among the plan's choices. Unlike an age-based portfolio, this will not rebalance automatically; you have to make the reallocations manually. (See age-based portfolio.)
Individual Retirement Account (IRA)
An investment with specific tax advantages. A traditional IRA defers taxes on earnings until withdrawal and, under certain circumstances, allows the deduction of some contributions from current taxable income. A Roth IRA requires after-tax contributions only, but allows tax-free withdrawals under certain rules.
An investment manager is selected by CollegeInvest to be responsible for the investments of the plan portfolio and underlying funds.
The designation of a contribution received by the Trust to a particular trust portfolio and the resulting investment of such contribution.
The objectives and guidelines that govern the investment of the Plan Assets.
As it relates to investments: The amount the fund charges investors to pay advisors and others involved in administering the fund.
Maximum Contribution Limit
The aggregate balance in all Program Accounts on behalf of a particular Beneficiary which may not be exceeded through additional contributions (currently $400,000).
Member of the Family (for purposes of Section 529)
a person related to the Beneficiary as follows: (i) a son or daughter, or a descendant of either; (ii) a stepson or stepdaughter; (iii) a brother, sister, stepbrother or stepsister; (iv) the father or mother, or an ancestor of either; (v) a stepfather or stepmother; (vi) a son or daughter of a brother or sister; (vii) a brother or sister of the father or mother; (viii) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; (ix) the spouse of the Beneficiary or of any of the other foregoing individuals; or (x) a first cousin. For purposes of the member of the family" definition
Modified Adjusted Gross Income
Your annual adjusted gross income without taking into account any IRA deduction, student loan interest deduction, or certain other deductions as specified under the Internal Revenue Code.
Money Market Fund
A mutual fund that sells shares of ownership and uses the proceeds to purchase short-term, high-quality securities such as Treasury bills, negotiable certificates of deposit, and commercial paper.
A pool of money from many investors that invests in a basket" of securities (stocks
Non-Age Based Investment Options
Any college savings plan portfolio that doesn’t shift asset allocation according to the age of the beneficiary.
a withdrawal of money from an Account for any purpose other than to pay the qualified higher educational expenses of the Beneficiary at an Eligible Educational Institution.
Withdrawals from a college savings account that are used for non-college related expenses. Non-qualified withdrawals are subject to income tax and an additional 10-percent penalty on earnings.
Parent Loans for Undergraduate Students (PLUS)
Federal loans available to parents of dependent undergraduate students to help finance the child's education. Parents may borrow up to the full cost of their children's education, less the amount of any other financial aid received. PLUS Loans may be used to pay the EFC. There is a minimal credit check required for the PLUS loan, so a good credit history is required.
Plan Disclosure Statement (PDS)
The applicable Plan Disclosure Statement for each of CollegeInvest's College Savings Plans, as amended and supplemented from time to time.
The plan manager is the person or entity that the State engages to provide administrative and other services for the plan.
Refers to the Investment Policy Statement established by CollegeInvest. The Policy Statement sets forth the policies, objectives and guidelines that govern the investment of Trust assets.
An investment offered through a 529 plan; it is made up of municipal securities. When you invest in a 529 plan portfolio you are buying units of the portfolio (not the underlying mutual fund or ETF).
A legal document that provides detailed information about mutual funds, stocks, bonds, and other investments offered for sale, as required by the Securities and Exchange Commission.
A distribution from an Account to pay the qualified higher education expenses of the Beneficiary at an Eligible Educational Institution.
Qualified Education Expenses
Expenses for tuition, fees, books, and supplies required for enrollment at any eligible college, university or vocational school in the U.S. and some foreign colleges.
Expenses for computers (desktops, laptops, or tablets); peripheral equipment such as printers, scanners, or monitors; software (excluding games and sports software); and internet access (separate from a bundle) all used primarily by the student. Other restrictions apply.
You also can use the money for room and board, as long as the beneficiary is at least a half-time student. The full cost of room and board counts if the student's housing is owned or operated by the college. Off-campus housing costs can qualify, too, up to the allowance for room and board that the college includes in its cost of attendance for federal financial-aid purposes (your college financial-aid office can give you that figure).
Any withdrawals from a college savings account that are used at eligible schools for college-related expenses. These withdrawals are tax-free and cover expenses such as tuition, room and board, book and supplies, and other required equipment intended for college use.
A tax-free reinvestment from one qualified plan to another within a specific time frame, usually 60 days.
You are permitted to transfer funds from another 529 college savings plan to an account in the CollegeInvest 529 College Savings Plan for the same beneficiary once within a 12-month period without incurring federal income tax. The 529 college savings plan from which you are transferring funds may be subject to differences in features, costs and surrender charges. You should consult with your tax advisor or the other 529 college savings plan. State and local taxes may apply.
A tax-deferred retirement account where, unlike a traditional IRA, contributions to a Roth IRA aren't tax-deductible, but there is no tax on withdrawals as long as the taxpayer is age 59 or older and the account has been open for five years.
A bond is a certificate representing a debt. A U.S. Savings Bond is a loan to the government. The government agrees to repay the amount borrowed, with interest, to the bondholder. The two types of savings bonds are Series EE and inflation-adjusted I Bonds. Savings bonds are often purchased through payroll deduction or at financial institutions in denominations of $50 to $10,000.
A form of financial aid given to undergraduate students to help pay for their education. Most scholarships are restricted to paying all or part of tuition expenses, though some scholarships also cover room and board. Scholarships are a form of gift aid and do not have to be repaid.
Section 529 of the Internal Revenue Service Code, the section that specifies the requirements for qualified tuition college savings programs (529 plans).
Mutual funds that invest mainly in stocks. Some stock funds may focus primarily on smaller, mid-sized, or larger corporations, or on specific market sectors. Also known as equity funds.
An expense that can be deducted from annually reported income to reduce the amount of tax payments to the government.
When taxes are paid at a future date. In the case of a 529, your earnings grow tax deferred; when they are withdrawn to pay for a qualified education expense, they are tax free.
An economic bonus which applies to certain accounts or investments that are, by law, tax-reduced, tax-deferred, or tax-free
Investments (e.g., municipal bonds) whose earnings are free from tax liability.
A legal arrangement through which a trustor manages a trustee's assets for the good of one or more beneficiaries.
U.S. Series EE and I Savings Bonds
Backed by the full faith and credit of the United States government, U.S. government savings bonds offer a tax-advantaged way to save for college. The interest from these bonds is usually exempt from state and local taxes and is tax free if used for qualified higher education expenses
The mutual funds or separately managed investment accounts in which assets of the Portfolios are invested.
Underlying Fund Expenses
Expenses or fees charged by an investment firm for managing funds for college savings plans. These fees come in addition to any administrative or management fees that a state government charges for running a college savings plan.
Uniform Gift to Minors Act (UGMA)
A tax-advantaged custodial account for college savings. An adult acts as the custodian for the account and makes all the investment decisions until the beneficiary reaches the age of majority. At that point the beneficiary controls the account and any assets in the account. UGMA accounts are limited to holding money and securities.
Uniform Transfer to Minors Act (UTMA)
A tax-advantaged custodial account for college savings. An adult acts as the custodian for the account and makes all the investment decisions until the beneficiary reaches the age of majority. These accounts are very similar to UGMA accounts, but in addition to money and securities, UTMA accounts can also hold real estate, fine art, and patents and royalties.
Translation of a consumer product price into the cost per standard size or weight. Unit pricing helps the consumer to make price/value comparisons between brands. Unit prices are usually displayed on supermarket shelf tags along with the package price.
Money that you take out of a 529 plan account. Withdrawals are either qualified or non-qualified. Qualified withdrawals are those used for qualified education expenses at Eligible educational institutions. All other withdrawals are non-qualified.