Another method is to invest in one of the many prepaid college plans offered by 11 states, numerous colleges and many financial institutions. Prepaid, fixed-cost plans have the advantage of locking in the cost of tuition, thereby providing a hedge against inflation. They are most cost-effective when choosing colleges within the sponsoring state. An alternative is the 529 College Savings Plan, provided by all 50 states and administered by state-selected investment companies such as Fidelity, Vanguard, TIAA-CREF, Schwab or Learning Quest. The cost of a 529 can fluctuate with financial markets but there may be tax or other advantages. Both plans provide options should the student choose not to go to college, and a student can have both a Prepaid Plan and a 529 Plan.
There’s good news for Florida residents enrolled in the Florida Prepaid College Program. Introduced in 1988, Florida Prepaid College Plans cover tuition and some other fees at one of Florida’s 12 state universities or allow funds to be applied to out-of-state schools. In July Florida’s 2014 Legislature greatly reduced the percentage of college tuition increases. As a result, prices of the most popular Florida Prepaid College Plans dropped to their lowest levels since 2007 and refund checks totaling nearly $200 million are being sent to about 18,000 families.
The Florida Prepaid College Program offers a variety of plans that range from a one-year to a four-year plan, with the monthly cost determined by the plan chosen and the age of the child at enrollment. To learn more about Florida’s plans, see myfloridaprepaid.com, which provides details, compares programs and allows users to determine costs.
To check on plans in other states, consider an internet search for the specific state or review websites such as http://www.morningstar.com/centers/529.html or http://www.thinkadvisor.com/2014/06/23/13-best-worst-529-college-savings-plans-of-2014-m?page_all=1. Finally, before choosing an approach to underwrite tuition expenses for your children or grandchildren, seek the guidance of your financial adviser.
Caldwell Trust Company
Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently manages over $800 million in assets for clients throughout the United States. The company offers a full range of fiduciary services to individuals, including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.