Prepaid Tuition

With the passing of time, prices are escalating in all areas of our lives, be it rent, household goods or even entertainment. Now in certain parts, such as in entertainment, we can buckle up our belts and cut down on costs. But there are certain areas, where however much the expenses go up, you can neither cut down or costs nor avoid them and compromise on them. The education of your child is one such area, where despite the exponentially escalating prices; you can not afford to compromise or cut down.

The government has already recognized the importance of education, which also happens to be one of our fundamental rights, and is offering various schemes through which students can complete their higher education without letting the hurdle of expenses and lack of funds to stop them mid way through their course.

One of the various schemes introduced by the government to help you out, that is to help its citizens out, is the scheme of prepaid education. Simply put, this allows you to pay now and buy college credit for your child for a few months or even for years at the rates that are applicable today. In return for this your child will be provided higher education at any institute without paying any money. The institute should be preferably within the state but some states also allow for transfer of funds to any institution the person goes to for higher education. You can pay the money either in installments or as a lump sum. The money that you would have to pay depends upon the age of your child. The younger the child is the lesser is the amount that is to be paid as a premium. If the child that you had invested for decides not to pursue higher education, then you can transfer the money for the use of some other child in the family.

But it has some disadvantages as well. To begin with if you invest in such a plan, the aid that your ward will be entitled to receive at the time of higher education goes down for each dollar that is invested in this plan. Besides the other options like mutual funds and so on give interest at better rates and also do not deduct any processing charge as is done in the case of the funds used for prepaid tuition.

Prepaid tuition thus turns out to be a plan, which has got its pros balanced by its cons leaving it entirely to you, whether you want to jump into the bandwagon or not.

529 Plans