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What is a Private College 529 Plan?

Jun 9, 2012

The one thing you can always count on when you send your child to college is that tuition will continue to rise. Preparing for that day when the child is just a baby is a smart thing to do. One solution for this problem is to prepay your college expenses.

When you prepay you really are just paying a smaller amount today for college costs many years away. Imagine what a college education will cost in 18 years. Why not lock in your rates today and save some money.

A prepaid tuition plan like Private College 529 lets you buy tuition certificates that are guaranteed by 270+ participating private colleges and universities, including Princeton and Stanford in addition to smaller liberal arts schools and research universities. Other schools can join at any time and new schools will honor any outstanding prepaid tuition. A semester of undergraduate tuition purchased through the plan today will be worth a semester of tuition for up to 30 years— no matter how much tuition rises or what happens in the financial markets.

You don't commit to a particular school when you enroll in the plan or at any point until your student enrolls and you redeem your tuition certificates. Because tuition rates vary among institutions, your contributions purchase different amounts at different schools. You are able to track how much tuition you own at any of the participating schools anytime by logging in to your account online.

Your prepaid tuition must be held for 36 months before it can be redeemed at a member school. The sooner you prepay, the more you're expected to save over time, for instance if tuition rises at a rate of 5 percent annually, enrolling now could potentially save you thousands of dollars by the time your child enters college. The plan offers the same federal tax benefits as any other 529-college savings or prepaid tuition plan and does not charge enrollment, management or annual fees; 100 percent of your contributions go towards the purchase of tuition.

And do not worry if your student does not attend a college in the plan . You are able to name another beneficiary, roll over into another 529 account or request your funds back. Savers are being urged to make their contributions by June 30th, before the new rates take effect.

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