College tuition is one of the largest expenditures many middle-class families make. While many people are aware of traditional 529s and Education IRAs, many people are unfamiliar with a Private College 529 Plans, which can be an excellent way to reduce the cost of college tuition.
The Private College 529 Plan is a tax-advantaged plan that allows families to lock in tuition prices at current levels. The plan is offered by nearly 300 private colleges and universities, and it allows families to save thousands of dollars on tuition costs. The plan works by letting families buy prepaid tuition certificates at current prices. The certificates can be redeemed 36 months after the first deposit, and they are guaranteed to keep up with college-tuition inflation. The average account size is $45,000, and the plan is not nearly as popular as traditional 529 plans. However, it can be a great way to save money on tuition costs, especially if you are planning to send your child to a private college. Here are some of the pros and cons of the Private College 529 Plan:
- Locks in tuition prices at current levels
- Guaranteed to keep up with college-tuition inflation
- Available at nearly 300 private colleges and universities
- Not as popular as traditional 529 plans
- Can only be used at participating colleges
- Does not cover room and board, computers, private K-12, or graduate school
If you are considering using the Private College 529 Plan to save for college, it is important to weigh the pros and cons carefully. For the right situation, it represents a low risk way to save a significant amount on private school tuition.
This is not a recommendation and is not intended to be taken as a recommendation. This material was prepared for general distribution and is not directed to a specific individual.
LPWM LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers.