The Wall Street Journal does a nice job explaining the opportunities that pre-paid 529 plans offer during tough markets like today’s. There is a lot to learn about 529s so take a few minutes for this great article. From the article,
Prepaid plans allow families to lock in current tuition rates by
making an upfront cash payment in exchange for tuition contracts or
credits tied to current rates. They can prepay either the full tuition
bill or a portion of it, typically based on the average tuition costs
in the state. States usually manage the money, and when a student
finally enrolls, he won’t have to pay more — no matter how much
tuition costs have risen.If investors buy only a portion, that same amount is credited toward
future tuition bills. In general, the tuition guarantee applies only to
state schools within that state, though you can use the money to pay
for out-of-state schools. If a beneficiary elects not to attend a
college covered by the plan, the investor can withdraw his
contributions, usually with interest.Directors of prepaid plans, which are offered by more than a dozen
states, say they’re seeing renewed interest as families anticipate
sharp tuition increases. Washington state, which offers only a prepaid
plan, has seen a 50% increase in rollovers from state residents who had
529 savings accounts based in other states. Pennsylvania has seen a 43%
increase in new account enrollment and a 19% jump in contributions from
May through September over year-earlier levels in its prepaid plan.
Other states, such as Virginia and Maryland, are seeing a pickup in
calls from consumers interested in enrolling in their prepaid plans or
rolling over their investments from their 529 savings plans.
BTW, do you have 529 plans set up for your kids and grandkids? Tuition
and expenses keep rising and 529s are a great tool for making it all
more manageable. Check out some of our other articles on 529s — in state vs. out of state 529s and 529 Funds Explained.
