How It Works

Prepaying for Tuition Can Potentially Save You Thousands on the Cost of College

Contributions to your account purchase Tuition Certificates at the current rate at any participating college or university, or any that join in the future. A Tuition Certificate represents all of your contributions in a Program Year, July 1 through June 30.

For example, tuition at College A is now $35,000 a year and you contribute $35,000 into an account with your 8-year-old child as beneficiary. If tuition rises an average of 4 percent a year, in 10 years College A’s tuition would be $51,809. By prepaying, you save $16,809 on that year of tuition. That $16,809 savings is tax-free.

Here is what that looks like:

Change in plans? If the student attends a school outside the Private College 529 network, you can change beneficiaries, roll the assets into another 529, or request a withdrawal like any 529 plan.*

Prepaid Tuition Certificates must be held for 36 months before being redeemed to pay for tuition at a participating institution. Rollovers or Withdrawals can be requested after 12 months. The waiting periods begin on the date of the first contribution in a given Program Year. Certificates that have not been redeemed within 30 years will be refunded.

* Private College 529 Plan assets can be used to pay any qualified expense at any college or university, public or private. The tuition guarantee applies only to participating institutions. Outside the network, the value of the account is calculated as your total contributions adjusted for net investment returns subject to a maximum increase of 2 percent per year or a maximum loss of 2 percent per year, compounded annually. If the refunded amount is not used to pay qualified education expenses, the earnings portion will be subject to federal income tax and an additional 10 percent penalty. See Disclosure Statement for details.