529 vs. Prepaid Tuition

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NabSh
Posts: 377
Joined: Fri Dec 25, 2020 11:09 am
Location: USA

529 vs. Prepaid Tuition

Post by NabSh »

What are your suggestions about investing in 529 investment account vs purchasing (529) Pre-paid Tuition credits.
BigSteve79
Posts: 11
Joined: Thu Apr 01, 2021 8:22 am

Re: 529 vs. Prepaid Tuition

Post by BigSteve79 »

With prepaid tuition, you have to be absolutely 100% positive that your kids are going to go to that school. It would be very unfortunate if you paid even for one class in prepaid tuition, and that child ended up deciding they wanted to attend a different educational institution. On the flip side, 529s are very different from state to state, so I would encourage research into which ones are best. I have heard an argument made for investing in a taxable account instead of an education investment vehicle. The main idea is to (1) teach your kids how to invest, and (2) if they decide to do something out of the norm like go immediately into the workforce or attempt to start a business, instead of going to college, this taxable account will help them out tremendously, and it could end up even being more valuable than a 529 or prepaid tuition plan.
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Brianmcg321
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Joined: Mon Jul 15, 2019 8:23 am

Re: 529 vs. Prepaid Tuition

Post by Brianmcg321 »

You have a lot more flexibility with a 529. Also, the return you get on the pre-paid is just the inflation rate.
Not a good deal to me.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
elle
Posts: 215
Joined: Thu Mar 13, 2014 3:13 pm

Re: 529 vs. Prepaid Tuition

Post by elle »

529 is the way to go. Even if they don’t use by going into trades, the non education withdrawal penalty is nothing compared to what you should expect for gains over time.
ModifiedDuration
Posts: 1408
Joined: Sat Dec 05, 2015 3:33 pm

Re: 529 vs. Prepaid Tuition

Post by ModifiedDuration »

Delve into your state’s 529 prepaid tuition plan in detail.

Some states 529 prepaid tuition plans are much better than others - regarding which colleges you can attend, attending out-of-state colleges, etc.
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