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With the global economy in a recession and the cost of college tuition and board continuing to rise, parents are looking at a variety of alternatives to afford college. One alternative program is prepaid college tuition plans. These investment accounts allow parents to pay for their child’s future college tuition at current prices. If you currently have enough money, you can prepay for your child’s college tuition that they will not use for another 18 years.
More colleges are beginning to develop prepaid college tuition programs. Some plans allow for the purchase of individual tuition credits while others let you purchase a semester or years’ worth of tuition. Luckily, this is one investment where the parent cannot lose money.
Prepaid college tuition plans are administered at the state level and most can be redeemed at public institutions. The only condition that must be met is you must live in the state. There are currently 19 states that have implemented this type of college savings plan with many more to follow in the future.
Prepaid college tuition plans have been available for almost 20 years. However, due to the popularity, the plans have recently become much more flexible. Furthermore, many states are paying a minimal amount of interest on prepaid contractual agreements. This confirms an excellent return on investment even if tuition rates do not rise much in the future.
So far these credits have proven to be a worthy investment with a great return on investment due to low interest, flexible and no risk involved. As a result of the many benefits, it is likely to see more of these plans emerge in the future.
