Put time on your side by saving now
Whether your future college student will attend a private or public college, funding education expenses will likely be a substantial challenge, as tuition and fees continue to increase dramatically. The College Board reports, “Over the five years ending in 2018-19, the largest increase was 10% to $35,830 in the private nonprofit sector, and 7%, to $10,230 at public four-year colleges and universities.”1
How will you meet those costs when the time comes?
Saving can be one of the most effective options for meeting future education expenses. And even small amounts saved early can potentially grow through compounding. Many families begin saving for education expenses as much as 10, 12 or even 18 years before their children go off to their chosen school. So even though college is far in the future, it’s never too soon to start saving for that day. For long-term saving and investing, a Section 529 Plan is a tax-advantaged way to cover qualified education expenses for a designated beneficiary.2
Section 529 account | Bank of America® Premium Rewards® credit card |
| If you have a Bank of America® Premium Rewards® card, you can use your points to help you save.3
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Section 529 account |
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Bank of America® Premium Rewards® credit card |
If you have a Bank of America® Premium Rewards® card, you can use your points to help you save.3
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If your savings grow less than you expected, you may need to combine savings and borrowing to cover college costs. College loans are available to the student but can take many years to repay. If you don’t want to leave your loved one burdened with debt when they graduate, consider these approaches for covering education expenses:
- If you have available equity in your home, a Home Equity Line of Credit (HELOC) from Bank of America can be a flexible solution for helping to cover some education expenses.
- Depending on your financial picture, you can borrow against the combined value of your eligible assets held at Merrill with a Loan Management Account® (LMA® account).
Your financial advisor can help you develop a personalized strategy for covering your child’s education expenses.
Risks
LMA account
Securities-based financing involves special risks. Clients should review their LMA Loan Agreement and related documents and disclosures carefully and consult with their own independent tax and legal advisors. The risks to consider include:
- A decline in the value of collateral assets may require the client to provide additional funds or securities to avoid a collateral maintenance call. Clients can lose more funds than are held in the collateral account. The LMA account is a full recourse loan and the account holder will be liable for any deficiency.
- Bank of America, N.A. ("the Bank") can force the sale or other liquidation of any securities or other investment property in the collateral account and, unless otherwise required by law, can do so without first contacting the account holder.
- The account holder is not entitled to choose which securities in the collateral account are liquidated or sold.
- The Bank can change its collateral maintenance requirement at any time without notice to clients.
- Clients are not entitled to an extension of time to satisfy the Bank’s collateral maintenance requirement.
- There may be adverse tax or other consequences to clients if securities are sold or otherwise liquidated by the Bank.
- The LMA account is an uncommitted facility, although loans to individuals and trusts may be committed in an amount not to exceed $100,000. The Bank may demand full or partial repayment at any time and any commitment may be immediately terminated.
- For fixed-rate advances and term loans, principal payments made in advance of the end of the applicable fixed-rate period, whether voluntarily or involuntarily, (due to demand or liquidation by the Bank,) may be subject to a substantial breakage fee as determined by the Bank.
- Some restrictions on the use of LMA account proceeds may apply under the terms of the loan documents and applicable laws and regulations. The LMA account cannot be used to purchase marketable securities unless specifically agreed by the Bank.
HELOC
- HELOC funds may not be used to purchase, carry or trade securities or repay debt incurred to purchase, carry or trade securities.
- Interest rate risk – As a variable-rate loan, interest rates and payments can change. Clients should carefully consider these risks before borrowing.
- Potential repayment volatility – For clients who opt for an initial interest-only period, at the end of this period, they will still owe the original amount borrowed, and the monthly payment will increase significantly and may result in "payment shock" — even if interest rates stay the same. Clients who want to make interest-only payments should ask what the payments will be after the end of the interest-only period.
1 Source: "Trends in Higher Education," The College Board. https://trends.collegeboard.org/college-pricing/introduction.
2 To be eligible for favorable tax treatment afforded to the earnings portion of withdrawals from Section 529 accounts, such withdrawals must be used for "qualified higher education expenses," as defined in the Internal Revenue Code. The earnings portion of a withdrawal that is not used for such expenses may be subject to federal income tax, including the 10% additional federal tax, as well as state and local income taxes. For distributions after December 31, 2018 qualified higher education expenses include tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school. These distributions are limited to $10,000 per calendar year, across all 529 accounts for the same beneficiary. State tax treatment may vary.
3 Bank of America® Premium Rewards® Program Information. How You Earn Points: You earn points when you use your card to make purchases, minus returns, credits and adjustments (“Net Purchases”). The following transactions are not considered Net Purchases and will not earn points: Balance Transfers and Cash Advances (each as defined in your Credit Card Agreement), fees, interest charges, fraudulent transactions and certain other charges. Unlimited 1.5 Points: Earn 1.5 base points for every $1 of Net Purchases (non-Travel and Dining) charged to the card each billing cycle. 2 Points: Earn 2 base points for every $1 of Net Purchases made with the card in the Travel and Dining category, with no limit on the number of points you can earn. Travel and Dining Category: Dining includes Restaurants, including Fast Food, and Drinking Establishments, such as Bars or Taverns. Travel includes: airlines, hotels, motels, timeshares, trailer parks, motor home and recreational vehicle rentals, campgrounds, car rental agencies, truck and trailer rental, cruise lines, travel agencies, tour operators and real estate agents, operators of passenger trains, buses, taxis, limousines, ferries, boat rentals, parking lots and garages, tolls and bridge fees, tourist attractions and exhibits like art galleries, amusement parks, carnivals, circuses, aquariums, zoos and the like. Purchases from some merchants that provide travel-related goods and services will not be eligible, like in-flight goods and services, and duty-free airport purchases. Travel and Dining Category Processing: Merchants are assigned a merchant category code (MCC) based on the merchant’s primary line of business. We do not determine which MCC a merchant chooses to classify itself. We group similar MCCs into Categories to help you earn rewards on purchases made at specific merchants. Your purchase may not qualify to receive the Travel and Dining category earn rate if the merchant does not process transactions under the MCC that corresponds with the Travel and Dining Category, or your purchase is processed through a third-party payment account, mobile/wireless card reader, digital wallet not supported by Bank of America or similar technology where the technology does not support transmission of MCCs. For those Net Purchases, you will earn 1.5 base points per $1. Not all merchants accept all credit cards. How You Use Your Points: When your points balance is 2,500 points or more, you can redeem your points for cash rewards, including a statement credit, an electronic deposit into a Bank of America® checking or savings account, a contribution to an eligible Cash Management Account® with Merrill Lynch Wealth Management® or Merrill Edge®, or College 529 savings account held at Merrill Lynch. Points may also be redeemed for travel at the Travel Center, or gift cards. Cash rewards shall be issued for a U.S. dollar sum and may be requested on demand. Each point redeemed is worth $0.01 (2,500 points = $25). Points Expiration: As long as your account remains in good standing, points do not expire. Points Forfeiture: If the owner(s) of the card account voluntarily closes the card account, or if for any reason we close the card account, any unredeemed points associated with the account are subject to immediate forfeiture, unless specifically authorized by us. Rewards Program Rules: Program Rules containing additional terms of your credit card rewards program will be sent to you with your new account materials. Other significant terms apply. Program subject to change.
4 Preferred Rewards for Wealth Management Program. You are eligible to enroll in the Preferred Rewards for Wealth Management program if you have an active, eligible Bank of America® personal checking or Bank of America Advantage Banking account and maintain a three-month average combined balance in your qualifying Bank of America deposit accounts and/or your qualifying Merrill investment accounts of at least $250,000. All Bank of America Private Bank clients are eligible for the Preferred Rewards for Wealth Management program. Visit bankofamerica.com/preferred-rewards for additional program details. Preferred Rewards for Wealth Management clients do not receive Merrill Edge Self Directed commission waivers or Merrill Guided Investing discounts as part of this program. Credit Card Preferred Rewards for Wealth Management Bonus: Certain credit cards are not eligible to receive the Preferred Rewards for Wealth Management bonus of 75%. A complete list of ineligible cards is available at bankofamerica.com/preferred-rewards. Enrolled clients with eligible credit cards receive the Preferred Rewards for Wealth Management bonus based on their type of card. For example, the Bank of America® Cash Rewards credit card Preferred Rewards for Wealth Management bonus will be applied after all base and bonus earn cash rewards have been calculated on a purchase. For example, a $100 purchase that earns 3% ($3.00) will actually earn $5.25 when the purchase posts to your account. For all other eligible card types, a purchase that earns 100 base points will actually earn 175 points when the purchase posts to your account. If your product receives the 10% customer bonus, the Preferred Rewards for Wealth Management bonus will replace the 10% customer bonus. The Preferred Rewards for Wealth Management bonus is not applied to any account opening bonus, if applicable. The Preferred Rewards for Wealth Management bonus also does not apply to the bonus earn for certain programs. This information can be found in the Program Rules associated with those credit cards. Other terms and conditions apply. If you have an eligible card, please refer to your card’s Program Rules for details about how you will receive the Preferred Rewards for Wealth Management bonus. Program Rules are mailed upon account opening and are accessible through the rewards redemption site via Online Banking or by calling the number on the back of your card.
Before you invest in a 529 plan, request an official statement from your Merrill financial advisor and read it carefully. The official statement contains more complete information, including investment objectives, charges, expenses and risks of investing in the 529 plan, which you should consider carefully before investing. You should also consider whether your home state or your beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's 529 plan. Section 529 Plans are not guaranteed by any state or federal agency.
The Loan Management Account (LMA account) is a demand line of credit provided by Bank of America, N.A., Member FDIC. Equal Opportunity Lender. The LMA account requires a brokerage account at Merrill Lynch, Pierce, Fenner & Smith Incorporated and sufficient eligible collateral to support a minimum credit facility size of $100,000. All securities are subject to credit approval and Bank of America, N.A. may change its collateral maintenance requirements at any time. Securities-based financing involves special risks and is not for everyone. When considering a securities-based loan, consideration should be given to individual requirements, portfolio composition and risk tolerance, as well as capital gains, portfolio performance expectations and investment time horizon. The securities or other assets in any collateral account may be sold to meet a collateral call without notice to the client, the client is not entitled to an extension of time on the collateral call and the client is not entitled to choose which securities or other assets will be sold. The client can lose more funds than deposited in such collateral account. The LMA account is uncommitted and Bank of America, N.A. may demand full repayment at any time. A complete description of the loan terms can be found within the LMA account agreement. Clients should consult their own independent tax and legal advisors. Some restrictions may apply to purpose loans and not all managed accounts are eligible as collateral. All applications for LMA accounts are subject to approval by Bank of America, N.A.
Before taking out any mortgage or line of credit, borrowers should consult their tax advisor to understand the implications of each of their options.
Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed, or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
The Premium Rewards credit card program is issued and administered by Bank of America, N.A.
Visa and Visa Signature are registered trademarks of Visa International Service Association and are used by the issuer pursuant to license from Visa U.S.A. Inc. Premium Rewards, Bank of America, Loan Management Account, LMA, Cash Management Account, Merrill Lynch Wealth Management, Merrill Edge and the Bull symbol are registered trademarks of Bank of America Corporation. All other company, product and service names may be trademarks or service marks of others and their use does not imply endorsement of, or an association with, this program.
Banking, mortgage and home equity products offered by Bank of America, N.A., and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Equal Housing Lender. 
Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.
