PFwise.com
Search
  • Home
  • Blog
  • Tools
  • Know-how
    • Insurance 101
    • Annuity 101
    • College Planning
    • Real Estate
    • Retirement Planning
    • Smart Investment
    • Stock Ideas
    • Tax Planning
  • About Us
  • 中文
  • Resources
    • Personal Finance Reading List
    • Financial Aid Resources
    • Personal Finance Calendar
    • Retirement Planning Calendar
    • ETF list
    • Financial Glossary
  • Newsletters Archive

Which is Better: 529 College Savings Plan or 529 Prepaid Tuition Plan?

3/8/2015

0 Comments

 
Q. My child is young, and I am considering opening a 529 plan for her.  Should I choose the 529 college savings plan or 529 prepaid tuition plan?

A.
529 College Savings Plan is better than 529 Prepaid Tuition Plan, for 3 reasons below:

a. Only Tuition Is Covered
The Prepaid tuition plan only covers tuition, not room and board, which could be half of the college cost.  So with the Prepaid tuition plan, you only lock in half of the college cost.

b. In-state Public Schools Only
If your child is still young, there could be a high possibility that at college time, your child might attend a private school or an out of state school.  Also, if you move out of state, and the child goes back to attend the in-state public school, the child still has to pay for the out of state tuition, with only the in-state tuition covered.  In other words, there are too many uncertainties.

c. State Might Cancel This Plan

At this time, only slightly more than a dozen states still offer the Prepaid tuition plan, because most states found that they couldn't get the return from the plan's money that is higher than the rate the tuition increases.  For the state plans that have cancelled their plans, they would return your money, only with a very low return.

In Conclusion
The Prepaid tuition plan is inadequate and uncertain, it's best to pick the 529 savings plan where you can invest in the stock market for a long time with higher expected return and more flexibilities.

0 Comments



Leave a Reply.

    Author

    PFwise's goal is to help ordinary people make wise personal finance decisions.

    Archives

    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013

    Categories

    All
    Annuity
    Book Reviews
    College Finance
    Finance In Formula
    Financial Scams
    For Entrepreneurs
    Healthcare
    Insurance
    Investment
    Miscellaneous
    Real Estate
    Retirement
    Savings
    Savings Ideas
    Stock-ideas
    Tax
    Tax-related

    RSS Feed

Powered by Create your own unique website with customizable templates.