1. What is Private College 529 Plan?
Private College 529 Plan is a prepaid tuition plan that allows families to save on the cost of college by purchasing tomorrow’s tuition at today’s prices.
You save on the cost of college by buying tuition at today’s rates that can be used at any of the nearly 300 participating colleges and universities for up to 30 years. No matter how much tuition increases over the years, or how volatile financial markets are, the participating institutions guarantee your prepaid tuition. Account owners pay no fees. Every dollar you contribute goes toward the purchase of tuition.
Private College 529 Plan offers the same federal tax benefits as any 529 prepaid tuition plan or state-sponsored 529 college savings plan. The value of your Private College 529 account grows as tuition increases. The increased value of your account is tax deferred and if the assets are used to pay qualified higher education expenses, the increase in value is tax free.
2. Tuition and fees at each participating college are different, so what are my contributions purchasing?
You are purchasing Tuition Certificates that can be redeemed to pay for future tuition at any of our participating private colleges. The amount of tuition you purchase is based on the current rate of tuition at each participating school. The percentage of a year you purchase will vary by school, based on the tuition rates at the time your Certificates are purchased.
EXAMPLE: A Tuition Certificate purchased for $10,000 today may be worth 0.33 years of tuition at one school where current tuition is $30,000 and 0.25 years at another school where current tuition is $40,000. Each time you contribute to your account the Plan calculates how much tuition you own at each participating school. We report how much tuition you own at your designated sample schools on your account statements. You can check how much tuition you own at any of our participating schools online at any time.
3. What is a Tuition Certificate?
All contributions you make to an account during a Program Year (July 1 through June 30) are aggregated into a single Tuition Certificate. If you make contributions to your account over multiple years, you will own multiple certificates, one for each year in which you contributed to your account. Your Tuition Certificates represent the amount of tuition you own at any of the participating institutions.
4. How quickly can a Tuition Certificate be redeemed?
Certificates must be held for 36 months from the “purchase date” before they can be redeemed to pay for tuition at a participating institution. The purchase date of a Certificate is the date of the first contribution in the respective Program Year.
5. Do I need to choose a school when I open an account?
No. Tuition Certificates purchased today can be used at any current or future participating school, as long as the student is accepted and enrolls. When you enroll in Private College 529 Plan, you are asked to designate up to five sample schools to monitor. Your selections can be changed online at any time, so you can check how much you’ve purchased at any participating institution.
Account statements will report how much tuition you own at each sample school to help you track your progress.
EXAMPLE: A Tuition Certificate purchased for $10,000 today may be worth 0.33 years of tuition at one school where current tuition is $30,000, but 0.25 years at another school where tuition is $40,000.
Participation in the Plan does not guarantee admission to any college or university, nor does it affect the admissions process.
6. Are there any fees associated with Private College 529 Plan?
No. Account owners pay no fees. Every dollar you contribute to your account goes toward the purchase of tuition.
7. What can I pay for with my Tuition Certificates?
Certificates can be used to pay for undergraduate tuition and mandatory fees. In general, mandatory fees are those fees students are required to pay as a condition of enrollment.
8. How are Tuition Certificates guaranteed?
Our participating colleges and universities guarantee your prepaid tuition. Each participating institution is contractually obligated to honor Tuition Certificates for up to 30 years from the date of purchase.
9. What if my child enrolls at a school that became a participating school after I purchased a Tuition Certificate(s)?
Schools that sign up to participate will honor all outstanding Tuition Certificates that were purchased before the school signed on. Participating schools guarantee Tuition Certificates for 30 years from the time of purchase, regardless of whether the school was a participating college at the time the Tuition Certificate was purchased.
10. What happens if my child gets a scholarship?
If your beneficiary receives a partial scholarship you can still use your Certificates to cover the remaining tuition costs.
- If your beneficiary receives a scholarship that covers all or part of the cost of qualified expenses, you can request a withdrawal for an amount up to the value of the scholarship without incurring a penalty If the Withdrawn amount exceeds the value of contributions to the account, the increase in value is taxable income but not subject to the 10 percent penalty.
- You can also change the beneficiary to another member of the family or roll the assets into a 529 savings plan and use the assets to pay for other expenses like room and board.
11. What is the impact of the Plan on my child's eligibility for financial aid?
Minimal. If the parent is the account owner, Private College 529 Plan accounts are treated as assets of the parent, which has a smaller impact on federal financial aid than if the assets were those of the child. The federal financial aid formula considers no more than 5.6 percent of parents’ assets and 20 percent of a child’s assets available to pay for college.
Individual institutions may consider parents’ assets in a different way when deciding how to distribute financial aid. Be sure to consult the college or university financial aid office and your tax advisor about your particular situation.
12. What if my child enrolls at a school that does not participate?
Additional colleges are joining Private College 529 Plan all the time. However, if your child goes to a college or university that does not participate, or doesn’t go to college at all, you have options:
- Change the beneficiary to a qualified family member
- Roll the account over into a state-sponsored 529 plan
- Request a Withdrawal*
13. Must you be the parent of a beneficiary to open an account or contribute to an existing Private College 529 Plan account?
Absolutely not. Friends, godparents, grandparents – anyone – can open an account or make a gift to an existing account. Gifting to a Private College 529 Plan account is a great way to make private school tuition affordable.
14. What if I don’t need all of my Tuition Certificates?
If your beneficiary does not need all of your Tuition Certificate(s), you will have options:
- Change the beneficiary to a qualified family member
- Roll the account over into a state-sponsored 529 plan and use the assets to pay for other expenses like room and board
- Request a Withdrawal*
15. How will I be kept informed about my the value of my Private College 529 Plan account?
When you open your account, you’ll be asked to designate up to five sample schools. You can change your sample schools online any time, enabling you to see the value of your Tuition Certificates at any participating school. You will receive periodic statements that report how much tuition you have purchased at each of your sample schools.
16. What happens if an account owner or beneficiary dies before a certificate is redeemed?
When opening an account, you must designate a beneficiary and appoint a successor owner. A successor owner assumes ownership of the account with all the rights of the original account owner, if the original account owner dies.
In the event of a beneficiary’s death, the account owner has two options:
- Designate a family member of the deceased beneficiary as the new beneficiary
- Request a refund*
In the case of a refund request, the one-year (12 calendar months) holding period for refunds is waived.
If you take a refund rather than redeem your tuition certificates for their intended purpose, the refund will be adjusted based on the net performance of the Program Trust, subject to a maximum increase of 2% per year, and a maximum loss of 2% per year. If your refund amount is not used to pay for qualified higher education expenses, the earnings portion of that amount will be subject to U.S. federal income tax and a 10% additional tax. See Disclosure Statement for details. The refund amount will be paid from the Program Trust only.
17. How does Private College 529 Plan compare to other college savings plans?
Private College 529 is the only prepaid tuition plan specifically tailored to help make private college affordable. Compare the plan to other college savings options.
If you take a Withdrawal rather than redeem your tuition certificates for their intended purpose, the Withdrawal will be adjusted based on the net performance of the Program Trust, subject to a maximum increase of 2% per year, and a maximum loss of 2% per year. If your Withdrawal amount is not used to pay for qualified higher education expenses, the earnings portion of that amount will be subject to U.S. federal income tax and a 10% additional tax. See Disclosure Statement for details. The Withdrawal amount will be paid from the Program Trust only.