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529 College Savings Plans in Pennsylvania

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Pennsylvania sponsors two tax-advantaged 529 college savings plans. One is an investment plan with underlying Vanguard funds, and the other is a prepaid tuition program. You can invest in one or both (if you go the prepaid tuition route, you may want to put a little more aside for non-tuition costs). For each child, you can contribute until your account(s) hold a combined maximum of $511,758 - one of the highest caps in the country. Pennsylvania families can also deduct a sizable $32,000 ($16,000 per spouse) in contributions from their state taxable income every year, making the Keystone State one of the most generous in the nation when it comes to 529 plans. To help you figure out which plan makes the most sense for your family - and how to fund it - talk to a financial advisor. SmartAsset's free matching tool will recommend up to three advisors who can help you plan for your child's education.

Plan Name Program Type How to Enroll Fees
PA 529 Investment Plan PA 529 Investment Plan logo Read Review College Savings Plan Direct-Sold 0.21% to 0.31%
Pennsylvania 529 Guaranteed Savings Plan Pennsylvania 529 Guaranteed Savings Plan logo Read Review Prepaid Tuition Plan Direct-Sold Varies

PA 529 Investment Plan

The PA 529 Investment Plan (IP) offers a range of benefits. Pennsylvania taxpayers can deduct their contributions (up to $32,000 for joint filers) on their state income tax returns. In addition, the entire account balance is exempt from Pennsylvania inheritance tax, and the money in the plan doesn’t affect a student’s eligibility for state financial aid. You can open an account with as little as a $25 deposit and choose from 26 investment options whose underlying funds are from low-fee Vanguard. These options include age-based portfolios that automatically change their asset allocation to become less risky as your child gets closer to college age.

How Do I Enroll in the PA 529 Investment Plan?

The easiest way to open an account is to do so online at The entire process should take about 10 minutes as long as you gather the following information about yourself and your beneficiary: 

  • Birthdates
  • Address
  • Social Security numbers or tax identification numbers
  • Your bank account and routing number if making initial contribution electronically

You can open an account with a minimum of $25. In addition, you can open an account by completing a paper form and mailing it in. Either way, you’re required to choose an investment option or options at time of enrollment.

How Much Does Pennsylvania’s 529 Investment Plan Cost?

Each portfolio in the PA 529 Investment Plan charges a total annual asset-based fee, which currently ranges from 0.205% to 0.305%. Total fees are not charged directly, but factored out of assets in the entire portfolio you invest in. So your account bears a pro-rata share. Still, the plan portfolio with the highest fee is still relatively inexpensive to invest in compared with portfolios found in other plans.

Tax Benefits of Pennsylvania’s 529 Investment Plan

Pennsylvania taxpayers can deduct up to $16,000 in contributions per beneficiary per year from their Pennsylvania state taxable income. Married couples filing jointly can deduct up to $32,000 in contributions, making Pennsylvania one of the most generous among plans that allow tax-deductible contributions. In fact, you receive state tax benefits as a Pennsylvania resident even if you open a 529 plan sponsored by a different state.  

In addition, money you contribute toward the PA 529 Investment Plan grows tax free. Money you take out of the plan isn’t taxed either as long as you use it for qualified higher education expenses like tuition and mandatory school fees. 

You can also withdraw up to $10,000 tax free every year to pay for K-12 tuition at private, public and religious schools. The SECURE Act also expanded qualified educational expenses to include the costs of apprenticeship programs and up to $10,000 in student loan payments. (Note: $10,000 is the lifetime limit for tax-free student loan payments.)

If you use 529 plan money on anything else, you may run into some trouble. Nonqualified withdrawals may be subject to federal and state income tax, as well as a 10% penalty. You may also have to pay back previously claimed deductions. You may want to find a financial advisor to discuss how a nonqualified withdrawal may impact you based on your unique circumstances. 

What Are My Investment Options?

The PA 529 Investment Plan offers age-based and static Vanguard portfolios designed for savers at all risk levels. If you’re new to investing, you may be interested in the target enrollment year-based options. In a nutshell, these portfolios gradually shift from growth strategies to capital preservation strategies as your child gets closer to college and you'll need to start making withdrawals. There are also a number of other portfolios that Pennsylvania offers that more specifically focus on types of investments and risk levels.

If you’re not sure what your portfolio should look like, you can use our asset allocation calculator tool to see how portfolio investment mixes can break down based on risk level. You can use the data to explore the plan’s individual portfolios. The PA 529 Plan individual portfolios cover all major asset classes and even socially responsible investments. You can choose from one or more of these options to create a personalized investment strategy based on your goals and financial situation. If you’re not sure how to customize an investment strategy with individual portfolios, you can reach out to a financial advisor to guide you through the process. 

But keep in mind that portfolio options are subject to change, so it’s a good idea to periodically check up on your investments. You should also give your overall college savings strategy a year-end check up.

How Do I Withdraw Money from the PA 529 Investment Plan?

You can request a withdrawal from your PA 529 Investment Plan via your online account. You can also download a withdrawal request form. Payments can be made to you, your child or your child's school. 

Pennsylvania 529 Guaranteed Savings Plan

The PA 529 Guaranteed Savings Plan (GSP) is a type of 529 prepaid tuition program that the Commonwealth of Pennsylvania sponsors. Unlike its direct-sold counterpart, your benefits won’t be tied to the ups and downs of the market. Instead, this college savings plan allows you to purchase college credits at today's prices.

You can choose from five different levels: PA state universities, certain state-related universities, PA community colleges, Ivy League universities and other private universities. Your child can redeem these credits in the future even if tuition has spiked by the time he or she is college-age. If you have leftover credits, you can use them to cover other qualified higher education expenses such as mandatory school fees and books required for enrollment.

How Does the PA 529 Guaranteed Savings Plan (GSP) Work?

When you open an account with the PA 529 GSP, you choose a tuition level which can span from a two-year, in-state community college to a four-year Ivy League school. Each of these would have a different GSP credit rate, which changes each enrollment period. 

Your account grows in line with tuition increases. So if you save enough to fund a four-year in-state university today, you can use your PA 529 GSP money to send your child to any Pennsylvania four-year college in the future.

The plan does this by allowing the Pennsylvania Treasury Department pools account owners’ money and invests it in the GSP Fund. But even if the investment performance is dismal at any given time, the plan is obligated to fulfill its guarantees. 

How Much Does the Pennsylvania Prepaid Tuition Program Cost? 

Your contributions into the program depend on the tution level you choose and the GSP credit rate at the time of enrollment. Currently, you would need to buy about 96 GSP credits to cover four years' worth of tuition at most Pennsylvania state colleges. The GSP credit rate for eligible Pennsylvania state colleges (for Pennylvania residents) for the 2021-2022 enrollment period was $321.50 (or $3,858 for 12 credits or one semester).

If you want to change your tuition level (say, you realize your child is headed to the Ivy League, after all), your GSP credits will be adjusted to the rates when you first opened the account. For current rates, check with a PA 529 GSP representative. 

In addition, you will also be charged a 0.40% account maintenance fee, which is deducted from your account quarterly. You can lower this to 0.30% if you choose to receive your account statements online. There is an annual cap of $500 and $250, respectively, for each fee.

Tax Benefits of Pennsylvania’s 529 Prepaid Tuition Program

The PA 529 GSP offers the same tax benefits as its direct-sold counterpart. This means you can enjoy tax-exempt growth on your contributions, tax-free withdrawals on qualified higher education expenses, and exclusive gift-tax exclusions and more. 

How Do I Enroll in the Pennsylvania GSP?

You can open an account online or by mailing in an enrollment application. However, you or your beneficiary must be Pennsylvania residents at time of enrollment.

How Do I Withdraw Money from Pennsylvania’s Prepaid Tuition Program?

You can fund qualified higher education expenses by logging on to your account. You can also mail or fax payments from the plan. You can direct payments to yourself, your beneficiary, the educational institution or even a third party such as a landlord. 

But remember that you’re not limited to opening an account with just one plan. You can also open accounts with out-of-state 529 plans if you find them more beneficial. 

If you’re looking for guidance about how best to invest for your child’s education, you can use our free SmartAsset matching tool to get paired with up to three financial advisors who serve your area. You can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now

Check Out Other 529 Plans

You do not have to live in Pennsylvania to invest in its 529 plan. Take a look at these other states' 529 plans.

New York 529 Plans Virginia 529 Plans Florida 529 Plans Maryland 529 Plans
Ohio 529 Plans Utah 529 Plans Indiana 529 Plans Alabama 529 Plans