A Prepaid Tuition Plan lets you purchase units of tuition for any state college or university at today’s prices. A semester’s worth of prepaid tuition purchased at 2009 prices would pay for a semester’s worth of tuition at any future date, no matter what the cost of tuition is at that time. Prepaid plans are simple in design and offer better rates of return on investment than bank savings accounts and certificates of deposit. The plans also involve no risk to principal, and often are guaranteed by the full faith and credit of the state.
Prepaid plans are typically more restrictive than 529 …
The Independent 529 Plan is a national prepaid tuition plan exclusively for a select list of private and independent colleges. Created in 1998 by a group of 18 southern colleges, it now has over 247 participating private colleges in 38 states and the District of Columbia. Its members include a wide range of institutions including large research institutions (Stanford, University of Chicago), traditional liberal arts colleges (Amherst, Middlebury), women’s colleges (Smith, Wellesley), historical black colleges (Spelman, Dillard), religiously-affiliated colleges (Notre Dame, SMU), and technically-oriented institutions (Rice, MIT). A full list of colleges and universities currently participating can be found at www.independent529plan.org.
The allure of …
Recognizing the economic and social benefits of promoting education, federal and state lawmakers have developed a number of investment plans, government programs, and tax incentives to make higher education financially accessible to more Americans.
Probably the most recognized savings vehicle for funding college educations today is the 529 Savings Plan. Named after the section of the federal tax code that allows them, they offer significant tax benefits. There are three basic types of 529 plans: the State-Sponsored 529 Savings Plan, the State-Sponsored 529 Prepaid Tuition Plan, and the Independent 529 Plan.
State-Sponsored 529 Savings Plan
With a 529 Savings Plan, earnings accumulate tax-deferred and withdrawals …
