Getting your kid into college in Chicago isn’t just about grades and applications-it’s about money. Tuition at public four-year schools in Illinois is around $18,500 per year for in-state students. Private schools? That jumps to over $50,000. And those numbers don’t include housing, books, or meals. If you’re starting from zero, saving enough feels impossible. But it’s not. Many Chicago families are already using the Illinois 529 plan to make college affordable, and they’re not alone.
What Exactly Is a 529 Plan?
A 529 plan is a tax-advantaged savings account designed just for education. It’s not magic, but it’s close. You put money in, it grows tax-free, and when you pull it out to pay for college, you don’t pay taxes on the gains. Illinois offers its own version called the Illinois Bright Start College Savings Program. It’s run by the state, backed by the state, and open to anyone-not just Illinois residents. That means even if you live in Wisconsin or Indiana but your child plans to go to school in Chicago, you can still use it.
The key advantage? Contributions grow without being taxed, and withdrawals for qualified education expenses-tuition, room and board, books, even computers-are completely tax-free at the federal level. Illinois also gives you a state income tax deduction. For 2026, you can deduct up to $10,000 per year if you’re single, or $20,000 if you’re married filing jointly. That’s real money back on your state taxes.
How Chicago Families Are Using Bright Start
Most families in Chicago start small. One mom in Lincoln Park started with $25 a month when her daughter was born. By the time her daughter turned 18, she had over $12,000 saved-mostly from growth, not just what she put in. That’s the power of compound interest over time.
Another family in Cicero used automatic payroll deductions from their jobs. Their employer matched 50 cents for every dollar they contributed up to $500 a year. That’s free money, and it adds up fast. Over five years, they saved $6,300, and the state’s investment returns added another $1,100. No one had to do anything special-just set it and forget it.
What makes Bright Start different from a regular savings account? Interest rates on savings accounts hover around 4% right now. But Bright Start’s investment options-mostly low-cost index funds-have averaged 6.5% annually over the last decade. That’s a big difference over 15 years. A $50-a-month contribution at 4% gives you about $11,000. At 6.5%, it’s nearly $16,000. That’s a $5,000 gap just from better returns.
Where the Money Goes: Chicago Colleges and Costs
The money in a 529 plan can be used at almost any accredited school in the U.S.-not just Illinois schools. But if your child is planning to attend one of Chicago’s big public universities, here’s what you’re up against:
- University of Illinois Chicago (UIC): $18,500/year (in-state)
- Illinois State University (normal commute from Chicago): $16,700/year
- DePaul University: $44,200/year
- Northwestern University: $62,800/year
Even if your child gets a partial scholarship, room and board still runs $14,000-$18,000 a year. That’s why families who save early often end up covering 70% or more of total costs. Those who wait until senior year? They’re scrambling for loans.
Local Resources That Help Chicago Families
Chicago has more than just a 529 plan. There are local nonprofits, city programs, and school-based services that help families navigate college savings.
- Chicago Public Schools (CPS) College and Career Readiness Program: Every high school in CPS has a college advisor. They help families open 529 accounts, apply for state grants, and understand financial aid forms. No appointment needed-just walk in.
- Chicago Urban League: Offers free financial workshops on college savings, budgeting, and avoiding predatory loans. They host monthly sessions in Englewood, South Shore, and Humboldt Park.
- United Way of Metro Chicago: Runs the Save for College initiative, which gives $100 to families who open a 529 account and make a $25 deposit. No income limits. Just show up with your child’s Social Security number.
- Chicago Foundation for Education: Offers small grants to low-income families to kickstart college savings. You can apply online, and they respond within two weeks.
These aren’t flashy programs. But they’re real. One dad in Roseland told me he didn’t even know about the $100 incentive until his daughter’s counselor mentioned it. He opened the account that same day. Two years later, he’s got $1,800 saved-not just from his deposits, but from the state match and investment gains.
Common Mistakes Chicago Families Make
People think they need to save $200 a month. They don’t. You can start with $10. The real mistake? Waiting.
Another mistake? Using the money for something else. A 529 plan isn’t a vacation fund. If you take money out for non-education costs, you pay taxes and a 10% penalty. That’s why most Chicago families who succeed keep their 529 separate from their checking account.
Some families also assume they need to pick the "best" investment option. But Bright Start has five pre-set age-based portfolios. If your child is under 5, it’s mostly stocks. At 12, it shifts to balanced. At 17, it’s mostly bonds. You don’t need to be an investor-you just need to pick the right age group.
What If You Can’t Afford Much?
You don’t need to be rich to start. A $100 opening deposit is all it takes. If you can’t afford $25 a month, try $5. Or set up a one-time gift from relatives for birthdays and holidays. One grandma in Oak Park started a tradition: "Every birthday, you get $50 toward college." By age 16, her grandson had $800 saved-just from gifts.
There’s also the Illinois College Savings Match Program. If your household income is under $75,000, the state will match up to $500 a year in contributions. That’s $500 free money every year, no strings attached. You don’t have to apply separately-it happens automatically when you file your state taxes.
How to Get Started Today
Here’s the simplest path:
- Go to illinoisbrightstart.com (no signup needed to browse)
- Click "Open an Account" and follow the steps
- Choose the age-based portfolio matching your child’s age
- Set up automatic transfers-even $10 from your paycheck every two weeks
- Tell relatives: "Instead of toys, give a college contribution. Here’s the link."
You can also visit a local library branch. Many have kiosks with staff who can help you set up an account in under 15 minutes. No appointment. No paperwork. Just bring your ID and your child’s Social Security number.
What Happens If Your Child Doesn’t Go to College?
You’re not stuck. You can change the beneficiary. That means you can switch the account to another child, a cousin, even yourself. Or, you can roll it over into a different 529 plan in another state. If you really need the money, you can withdraw it-but you’ll pay taxes and a 10% penalty on the earnings. The original contributions? Those come back tax-free. So you’re not out the money you put in.
Final Thought: It’s Not About Perfect-It’s About Starting
There’s no perfect time to start saving. The best time was five years ago. The second-best time is today. Chicago families who saved $50 a month for 15 years ended up covering over half of their child’s college costs. Those who waited until high school? They took out loans that took 20 years to pay off.
You don’t need to save $500 a month. You don’t need to be a financial expert. You just need to start. And if you do, you’ll be ahead of 80% of families in this city.
Can I use my Illinois 529 plan at any college in the U.S.?
Yes. The Illinois Bright Start plan works at any accredited college, university, or trade school in the U.S., and even some international schools. As long as the school accepts federal financial aid, you can use your 529 funds there.
What if my child gets a full scholarship?
If your child receives a scholarship that covers tuition and fees, you can withdraw up to the scholarship amount from your 529 plan without paying the 10% penalty. You’ll still owe income tax on the earnings portion, but not the penalty. You can also use leftover funds for room and board, books, or transfer the account to another family member.
Is there an income limit to open a 529 plan in Illinois?
No. Anyone can open an Illinois Bright Start account regardless of income. However, to qualify for the state tax deduction and the $500 annual match, your household income must be under $75,000 (single) or $150,000 (married). Higher earners can still open an account and benefit from tax-free growth.
Can I contribute to a 529 plan for someone else’s child?
Absolutely. Grandparents, aunts, uncles, and friends can open their own 529 account for your child or contribute to an existing one. Many families set up a link on their wedding registry or birthday page so relatives can give college contributions instead of gifts.
How does the Illinois state tax deduction work?
Illinois lets you deduct up to $10,000 in annual contributions if you file as single, or $20,000 if you’re married filing jointly. That deduction reduces your taxable income, which lowers your state tax bill. You don’t need to itemize. Just report your contributions when you file your state return.
Are there fees with the Illinois 529 plan?
Yes, but they’re low. The annual fee is about 0.27% of your account balance-less than $3 per year for a $1,000 balance. There’s no enrollment fee, no maintenance fee, and no fee to change investment options. Compared to other states, Illinois is one of the lowest-cost plans.
Can I use 529 money for K-12 private school in Chicago?
Yes. Federal law allows up to $10,000 per year per beneficiary for tuition at private elementary or high schools. So if your child attends a private school in Chicago, you can use your 529 funds to pay part of the tuition. This doesn’t affect your ability to use the rest for college later.
What happens to the money if I die before my child goes to college?
You name a successor account owner when you open the plan. That person-usually a spouse or parent-takes over and can change the beneficiary or continue saving. The account doesn’t go through probate, so it’s protected and passes directly to your chosen person.