College Affordability in Illinois: Where Bright Start Fits Into the Bigger Picture

In Illinois today, the cost of higher education looms larger than ever. Public universities and community colleges have raised tuition and fees far beyond inflation. Many students emerge with heavy student loan debt. 

Policy makers, parents, and students alike are asking what can actually help families afford college without risking lifelong debt. Bright Start 529 College Savings Plan appears as part of that answer. It is one among several initiatives in the state that aim to ease financial pressure. 

This article explores how Bright Start places itself in the broader affordability landscape when it comes to funding college education.

Rising Tuition Costs & State Disinvestment

Over the past two decades, Illinois has substantially reduced per-student state support for public higher education. Adjusted for inflation, funding for universities and community colleges has dropped nearly in half since the early 2000s. In response, tuition and fees at public four-year colleges have increased roughly 115 percent in that timeframe, after accounting for inflation.

This state disinvestment has pushed many students toward higher cost burdens. Illinois now ranks among the states with the highest in-state tuition fees, especially in the Midwest.

Meanwhile, enrollment in public institutions has declined, suggesting that many prospective students are turning away from Illinois schools due to cost.

The Student Loan Debt Burden

The rise in college costs feeds directly into greater student loan debt for many Illinoisans. The state’s collective federal student loan obligations now total around $63 billion. The average borrower owes about $39,000.

Private loans also play a role. Students often depend on them to cover gaps in tuition, fees, room and board, etc., when savings, grants, or federal aid fall short. Many of these loans carry higher interest rates and fewer protections.

These trends are not sustainable for numerous households, particularly lower- and middle-income families. The risk is worsened by uncertainties in federal financial aid and fluctuations in state funding.

Bright Start: Design, Features, and Role in Illinois Policy

Bright Start 529 college savings plan is Illinois’ direct-sold plan administered by the Illinois State Treasurer’s office. Since its launch in 2000, it has helped families accumulate savings for higher education. As of mid-2024, Bright Start savers had over $11.9 billion in assets covering nearly 396,800 students. Over $5.45 billion of that has already been used to pay for qualified higher education expenses.

Key features of Bright Start include:

• Tax-deferred growth of investments (earnings grow free of federal and Illinois state tax as long as withdrawals are used for qualified expenses).
• For Illinois taxpayers, contributions are deductible up to $10,000 per year for individuals, $20,000 for joint filers.
• No fees to open or maintain an account, no minimum contribution, no minimum balance. This ensures accessibility.
• Flexibility: savings can pay for tuition, fees, room and board, books, apprenticeship programs, and other qualified education expenses.

Bright Start has gained strong third-party recognition. It has earned a Morningstar Gold Rating multiple times. The plan is among the lowest-cost 529 plans in the country.

Illinois also introduced Illinois First Steps. This is a seed deposit into Bright Start or Bright Directions 529 accounts for children born or adopted on or after January 1, 2023. This program aims to encourage saving early in life. In its first 18 months, over 9,400 families have claimed the seed deposit.

How Bright Start Fits Into Education Initiatives

Illinois has pursued multiple strategies to combat rising costs, mounting debt, and declining enrollment. Bright Start aligns with several state goals: improving access to higher education, increasing equity, and reducing debt burdens.

First, the plan supports affordability through savings for higher education rather than relying purely on loans. Families who begin saving earlier can reduce reliance on student loans. Bright Start’s accessibility features (no minimum, no fees to open or maintain) try to lower barriers for families who might struggle otherwise.

Second, its tax advantages help leverage existing policy levers. The ability to deduct contributions makes saving more attractive, especially for middle and higher-income families. This complements financial aid and grant programs by letting families reduce their taxable income while building funds for tuition.

Third, the Illinois First Steps program signals policy interest in children’s savings accounts (CSAs) as early intervention. Research suggests that children with dedicated college savings are more likely to attend college. Bright Start is central to that effort in Illinois.

Finally, Bright Start has introduced several enhancements, like lower fees, improved investment options, and new mobile tools. These enhancements demonstrate responsiveness to critics who say tuition growth has outpaced improvement in affordability tools.

Challenges & Areas for Growth

While Bright Start plays an important role, it cannot alone solve the affordability crisis. State tuition hikes, disinvestment, and high living costs remain large obstacles. Even with savings and tax-deferred growth, many families may struggle to save enough to fully cover college costs.

Further, reaching families with lower incomes or those unaware of 529 plans remains a challenge. Uptake in some regions of Illinois for the First Steps seed program remains low relative to total births.

There are also limits to what 529 savings can cover: while tuition, fees, room and board are included, indirect costs can still be burdensome. And market risk, contribution capacity, and inflation may erode savings.

Frequently Asked Questions (FAQs)

What exactly qualifies as a “qualified higher education expense” under Bright Start 529?

Qualified expenses include tuition, mandatory fees, required books and supplies, and room and board (for those enrolled at least half time). They also include computers and software required by the institution, apprenticeship program expenses, and some loan repayment and other specialized costs.

What happens in case I don’t use all the money in a Bright Start 529 account?

You can change the beneficiary to another eligible family member. If you withdraw funds for non-qualified expenses, you’ll owe taxes and possibly penalties on the earnings portion. The principal is always returned but earnings lose their tax advantages.

How does Bright Start compare cost-wise to other 529 plans nationally?

Bright Start is among the lowest-cost 529 plans in the country. Fee reductions negotiated by the Illinois Treasurer’s office saved families over $100 million since 2015. The plan has earned several Gold Morningstar ratings, and its total asset-weighted fees were recently reduced by 13 percent.

Illinois is facing an affordability crisis in higher education. Rising tuition, shrinking state support, and growing student debt all paint a tough picture. But Bright Start 529 College Savings Plan represents a substantial tool in the state’s policy arsenal. 

Bright Start will not erase the challenges of the cost of living, room and board, or state disinvestment. But alongside stronger state funding, more robust grant programs, and greater awareness among families, it helps tilt the balance toward greater college affordability. If Illinois ensures that these policies continue to evolve, Bright Start could become central to a more affordable higher education future in Illinois.