College Pre-Paid Tuition Plans

Updated on April 08, 2011
N.P. asks from New Lenox, IL
7 answers

Just curious if any of you invest in a pre-paid tuition program for your children. If so, which plans? If not, how else have you chosen to invest for your child's education? We currently invested (past 4 years) in College of IL plans and with the stability of the state and the recent learnings, we feel like we should pull out now but need to invest in something else.

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answers from Chicago on

We have not contributed to any “college plan” and never will because whatever money you put in that kind of plan will be considered college money when your financial situation will be assessed at the time of college admission and will be taken as such. We have invested money in the child’s name at this time but will transfer them into our name one year before he goes to college so the money will not be considered “his”. The child’s money is considered 100% tuition eligible and not the same case with the parents’ money. It also depends what your income is. If you are in the lower or mid – income tier you will be better off investing in your retirement funds than into college savings accounts for your kids.

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answers from Chicago on

Yes you are wise to pull out. Dave Ramsey has some great advice about college saving plans. And he will give you specifics on how to go about it & what programs to watch out for. He also has a monthly college planning calculator that is great.

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answers from Chicago on

I have one for my daughter who will go to
College next year. Best investment we could have made. Cost of tuition went up 11% this year, so we earned 11%. not many investments can beat that! I say , stick with it.

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answers from Tulsa on

We did the 529 and then it was closed and our money sent to a new fund. We found out the fees were much higher and after 9 years we made 2.2% total which we could have gotten anywhere. We are not putting more in at this time.



answers from Chicago on

There are 2 types of plans. One is 529 plans. You can invest tons of money into these plans. The money grows interest free year over year. My understanding when these plans were created is that this money is NOT included when colleges go through financial aid planning. Maybe it's changed, and one responder said it is included, but that's not my recollection.

If you are lucky and have parents looking to find a place to put some cash, they can put a nice amount every year into a 529 plan. That's not my situation, so I don't know much more than that.

Pretty much each state has a 529 plan. You can invest in any one states 529 plan and go to college in any state. For Illinois, if you invest in the Illinois 529 plan, you get a little write off on your State Income Tax. Check our SmartMoney. They are a magazine and a web site. They've evaluated all the states and have picked the top ones.

You can change the name of who the 529 plan goes to. Having time on your side for an investment helps. We opened 529 plans before our children were born, and put them in our own names. Then after our kids had SSNs, we transfered the account to them.

We're hoping our kids go to community college for 2 years and then finish at a 4 year school. But if they decide to go to a trade school or not need all the money, we can transfer the balance to basically anyone.

I'm less familiar with the other pre-paid tuition program.

Investments are investments. Either get knowledgeable about it, or talk to someone who is (a certified accountant). It wouldn't cost much to talk to an accountant, and get you on the right track.

Comparing all my investments in the stock market over the past year, they've all tanked. The other way to think about it is that I was buying low, and hope to get a pay out when it's high.

Good luck!


answers from Austin on

I am on the end of this.. Our daughter was given a tuition plan (Texas Tomorrow plan)when she was 7. My mother purchased it.. She paid about $4000 total at that time. This plan was for in state tuition rates, we never dreamed she would attend college out of state!

It paid out her freshman year $8000. Her sophomore year $9500. and this year $10,250. She will be a senior in the fall! And it will be a huge help because she is once again taking a full load. She is a dble major.

You decide if this was a good deal.. BTW, we have received good deductions each year she has been in college. We bank it and reuse it in the fall. It is hard to know what classes she will be signing up for year to year, so this has helped,.

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