Bright Start Savings is a 529 education plan administered by the State of Illinois and its State Treasurer's office. The fund is distributed by OppenheimerFunds Distributor, Inc. OFI Private Investments, Inc. OFI Private Investments, Inc. manages all funds, while the following entities manage the investments: The Vanguard Group, American Century Investments and OppenheimerFunds, Inc.
Because Bright Start Savings is a 529 plan, the beneficiary and his parents/guardians pay no taxes on the fund's earnings when college tuition comes due. Money is withdrawn as needed, with no penalties.
No minimum monthly contribution is required, but the more that is contributed, the faster the fund grows and the more interest the account will earn.
Anyone, regardless of where they live, can open a Bright Start College Savings account. Illinois residents receive certain state tax benefits, but non-residents are eligible to participate. A minimum deposit of $25 is required, and monthly contributions are encouraged. The application form can be found on the program's website, brightstartsavings.com.
The Bright Start Savings plan is diversified, with a combination of stock and bond investments. Enrollees may choose from age-based and choice-based portfolios. Interest earnings vary, depending on the market's performance.
The following scenarios are based on an assumed 5 percent return and an initial investment of $5,000, followed by $100 per month contributions: an account opened for a newborn child will grow to $46,699 by the time the child reaches 18; an account opened for a five-year-old will grow to $31,255 over the next 13 years; and an account for a 10-year-old will grow to $19,154 by the time he reaches 18 years of age.
The fund can be used for college tuition and fees, and the American Recovery and Reinvestment Act of 2009 has further expanded the list of qualified expenses that the Bright Start Savings plan can cover. These include books, computer equipment, room and board and special needs services.
The Bright Start Savings website (brightstartsavings.com) includes several features that help explain college education funding and how the 529 plan functions. Within the site is an Education Funding Planner, which allows visitors to plug in the child's current age, probable college start date, specific colleges and so forth. The planner estimates how much college tuition and expenses will be and how to set and reach the necessary financial goals.