Andrew Spargo likes his newspapers—the printed version—not the online sites. So he was reading The Wall Street Journal in 2003 when he saw an ad for a new way to save for college, called Independent 529. (It’s now Private College 529 Plan.)
At the time, Andrew and Barbara’s daughter, Naomi, was just two years old.
Andrew, a property and casualty insurance broker in Florida, instantly grasped the concept that prepaid tuition, guaranteed by a roster of hundreds of colleges, eliminated risk in saving for college. “In those years, college tuition was going up remarkably, so to me it was a no-brainer, a guarantee with no risk,” he says.
The family had significant funds in a state 529 plan at the time and moved some of those assets to Private College 529.
Starting in the Plan when his daughter was a toddler, Andrew had no idea what she would be interested in by college time. But he was impressed by the range of schools that participate. “The flexibility and choice your plan offers was ideal.” The nationwide diversity of schools is much wider than the opportunities afforded by his state prepaid tuition 529 plan.
When Naomi began her college search, he reminded her of the options available through Private College 529 and indicated that one of those nearly 300 institutions should be her college home. She wanted to pursue a double major in math and computer science. She applied and was accepted by four schools: MIT, Caltech, University of Chicago, and Carnegie Mellon. Naomi has just completed her freshman year at the Pittsburgh school.
As for mom and dad, the tuition they prepaid 17 years ago was about half the cost of the current rate at Carnegie Mellon. They saved more than $25,000 on Naomi’s freshman year, with still more savings to be achieved in the remaining years until graduation.
As for parents of young children, Andrew is a strong advocate for prepaid tuition. Most families know they need to start planning but aren’t sure how. They might go with a 529 savings plan, but “the chance of investing and gaining enough to keep ahead of tuition increases is unlikely.” Whatever route a family chooses to save, his advice is: “Do it. Do it as soon as possible.”
You may also like:
Colleges require one or more of the following applications to apply for federal, state and institutional financial aid. In light of Covid-19, deadlines may have changed or vary from last year. Missing them can mean missing out on financial aid you would have been...
If I’m still finalizing my college list and because of Covid-19 I can’t visit campuses, are there other things I should be doing to prepare to apply? Even if you can’t visit and your list is not final, there is plenty you can...
My child is entering her senior year of high school, and obviously college visits are out. How can parents support the totally virtual college search? This is a question close to my heart because I have a daughter who’s a...
This material is provided for general and educational purposes only, and is not intended to provide legal, tax, or investment advice, or for use to avoid penalties that may be imposed under U.S federal tax laws. Contact your attorney or other advisor regarding your specific legal, investment or tax situation.