Prepaid college programs.

     The prepaid college program offered by many states or colleges provide a convenient means for locking in the future education costs at the current education costs. The amount you pay to participate in the program is dependent upon the number of years until your child attends college. The earlier you participate, the lower the monthly payments. The later you participate, the higher the monthly payments. The payment amount does not increase even though the cost of education increases because you've locked in the education costs. The programs may limit where and how the money can be applied and they may or may not provide an opportunity to apply that money towards a different college other than the one for which the program was intended.

     Instead of giving your money to someone else, consider using existing investment programs that will most likely achieve a greater amount of money by the time your child attends college than the projected costs of education for which the prepaid college program was intended. The use of investment vehicles described in this section of the book provides the necessary information to determine which direction best suits your goals by accounting for tax-deferred growth, investment growth, and tax advantages to more than compensate for the increased education costs for which the prepaid college programs are intended to control. Investing on your own can also provides greater flexibility and control of your money.

     Decide on your own which would be the better option for you or consult a financial advisor for assistance. Ensure you understand the rules and restrictions associated with the prepaid college program contract before making your decision. Also, consider making that decision before your child is born.


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