Should I utilize a pre-paid college plan that guarantees the future cost of college if I invest money today?
A few states and colleges offer programs in which a parent pre-pays portions of tuition well before the child nears college age and, in return, is guaranteed that share of tuition, regardless of future cost increases. The key to that decision is the likelihood that your child will want to attend the specific college or group of colleges in the program. The tuition shares usually lock your child into specific choices. Before you invest, find out what happens if your child decides to attend another school, or no college at all. Most plans will return your principal but none of the interest you would have accrued. As an alternative, a quality growth mutual fund or stock portfolio can usually keep pace with and often exceed the growth of college costs over the long term, and still give your child the flexibility of college choice.
Related Questions
- Should the Legislature borrow money to guarantee the future of the Pre-paid Affordable College Tuition program (PACT)?
- Should I utilize a pre-paid college plan that guarantees the future cost of college if I invest money today?
- Can prospective students start a 529 plan to put pre-tax money in a college fund?
