A Safe Way to Save for College During the Coronavirus Pandemic

With a scary stock market and an unpredictable economy, investing can seem like the last thing you want to do right now. You might be hesitant to invest in a 529 college savings plan right now in the midst of the coronavirus-induced bear market. However, an FDIC-insured 529 college savings plan could be exactly what you’re looking for.

These 529 plan investment options are insured by the federal government, through either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF). Because these plans are backed by the full faith and credit of the U.S. government up to certain limits ($250,000 per account holder per institution), federally-insured products are suitable for conservative investors interested in preserving capital without taking on excess risk. 

Unlike the stock market, these investments will not lose value. The potential return on investment from interest income is lower, but so too is the investment risk. 

There are 18 states that offer 529 plan options that are insured by the Federal Deposit Insurance Corporation (FDIC), including high-yield savings accounts and bank certificates of deposit (CDs). FDIC-insured investments are suitable for families who want to preserve capital in their 529 plan without taking on excess risk with the uncertainty of COVID-19.

 States that offer FDIC-insured investment options within 529 plans