Prepaid College Tuition

529 Prepaid tuition plans allow people to lock in today's tuition prices by prepaying by the credit.  This means if you buy five credits through a plan, it doesn't matter how much they cost when your son or daughter actually attends college, because you will have already paid for them.  The state agrees to pay the difference, as long as your child attends an in state public college.

Only a handful of states currently offer prepaid tuition plans.  Since tuition has been rising faster than inflation, many states have had to bail out of these plans.  Stock market returns for the last 5 years have been minimal, prepaid tuition programs have grown in popularity compared to other investment vehicles.  Also, if you don't use the money for college, it can be difficult to extract the money from these plans.  Most states will only allow you to buy into a plan if you live there, if you move, your child could be considered an out of state student. 

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