Sep 20 17:07 2008 Matt D Murren Print This Article

Preparing for the future using 529 accounts.

The Prepaid College 529 tuition plan came about in the 1980s.  In 1996 they were incorporated into Section 529 of the Internal Revenue Code.  With the Prepaid 529 College tuition plan you buy credits at a college or university which is participating in the program.  It is used in the future for tuition and sometimes room and board.  A majority of prepaid college tuition plans have a requirement that the student has to be registered at an in-state college or university because they are state government sponsored. 

There is a guarantee that when you purchase the credits today that regardless of whether or not tuition rates increase in future years,Guest Posting that the amount of schooling that you bought will be paid for when you need it.  If college costs have increased before the Prepaid College 529 plan is used they will still be paid.  It is required however that the student must be enrolled n an in-state college I order to receive the guarantee.  With most of the prepaid college tuition plans students who are past grade 10 cannot be enrolled.  Although most of the prepaid plans provide for the account to be used in an out-of-state college the credits in your tuition account may not be enough to pay for the tuition at these colleges.  The value of your Prepaid College 529 contract is based upon the tuition rate of the state where it was purchased.  You will receive your entire contribution to the account plus interest which has accumulated.  Your tuition in this plan can also be transferred to someone else in your family.  In most of the 18 states which do have a Prepaid College tuition plan the contributors to the account or the future student must be a resident of that particular state.

The two types of Prepaid College 529 plans are the units plan and the contract plan.  With the units plan you can purchase tuition by the unit.  A unit may be equivalent to a percentage of the tuition or it could be a particular amount of credit hours.  A contract plan will allow the purchaser to obtain a tuition contract from one to five years.

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Matt D Murren
Matt D Murren

Matt D Murren owns and operates Prepaid College 529 Plan

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