With that in mind, he says parents need to carefully consider the terms of any loans and whether the cost of borrowing exceeds the anticipated cost of tuition increases. Robert Kohen of Kohen Educational Services also adds that parents rarely foot the bill for prepaid tuition upfront, and that they usually get on some kind of payment plan or borrow money from the college. "It's not really prepaid if it's a higher cost than current rates," he says.ĭr. Compeau says that Michigan prepaid plans charge more than $23,000 for some students to purchase two semesters of school, whereas in-state tuition falls between $11,000 to $16,000 per year. "It seems this is happening at many Florida schools right now," he said.Īnother potential downside of prepaid tuition plans includes scenarios where colleges make the decision to charge more than current in-state tuition upfront. Compeau of BridgeWise College Planning points out that, in some cases, schools will just raise the cost of room and board to try to recoup some of these costs. "This is not necessarily a risk, but a consideration that students and families can keep in mind as they plan financially for the full cost of college attendance," said Inglet.Ĭollege planning advisor Paul E. If you do have access to a prepaid college tuition plan, Wilmington Trust’s Family Legacy Advisor Jerry Inglet says you should know that these plans are only usable for college tuition and fees, and not on ancillary expenses like room and board (like you could with a traditional 529 plan). In fact, 22 different states offered such a plan several years ago, whereas only nine states offer one now. ![]() After all, some of the plans offered in different states are much better and a lot more flexible than others, and there are some general risks to be aware of as well.įirst off, you should know that prepaid college tuition plans appear to be fading and becoming less popular overall. While you ponder the issues plaguing college savers in Maryland, it's probably smart to consider all the pros and cons and prepaid college tuition plans before you start using one. Pros And Cons Of Prepaid College Tuition Plans ![]() " Free Our Interest NOW, Maryland529!!!" currently has 805 members, and it's showing several new posts per day. While they wait, some parents created a Facebook group to vent about this issue and discuss potential solutions. "The parents may need to file a lawsuit to get answers," he said.
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