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Guide to Prepaid College Tuition Plans
College tuition is rising at meteoric rates never before seen in history. Along with rising tuition costs is the necessity of having a college education in order to get a good job. These two factors have put a lot of financial pressure on families to plan for the future. Prepaid college tuition plans have become increasingly popular because of their convenience and value. Prepaid college tuition plans are a type of 529 college saving plan are available to people who want to use investment vehicles to save for college.
There are several benefits to prepaid college tuition plans such as the ability to lock in the cost of college tuition today even though the child may not be attending for many years. They are also low-risk investments because they are backed by the government and guaranteed to at least match in-state college tuition price increases.
As with any investment vehicle, there is also a downside to the 529 college saving plan. The downsides of prepaid college tuition plans are that they are often limited to state residents, are geared toward in-state public institutions, have high refund and cancellation costs, negatively affect financial aid, and have narrow definitions of college expenses.
Despite their downsides, investing in a 529 college saving plan is a smart move. The government has also implemented a college tuition tax credit. The college tuition tax credit was created to offset the burden of college costs to the family. For more information on these plans see an investment professional.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
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