Independent 529 Plan

There is much discussion, especially with rising college tuition costs and our country's current economic situation, about preparing in advance to finance college education. There are many opportunities, including , but not limited to, education savings bonds, traditional IRAs, Coverdell Education Savings Accounts, and state prepaid 529 plans. Another option for some families may be the Independent 529. 274 colleges/universities in 39 states are currently affiliated with the program (September 2008). According to the plan administrators... "Independent 529 Plan allows you to prepay tuition today that your child can later use at any member college. It provides a guarantee against tuition inflation, and the flexibility to choose from some of the nation's top colleges. Independent 529 has no start-up fees, no maintenance fees, and no annual fees-and is free from federal taxes. Independent 529 Plan operates on one simple principle: in return for prepaying college costs, member colleges carry the risk and protect you from future tuition increases. The tuition you purchase today is guaranteed to satisfy costs at the time your child enrolls. So, if you purchase a half year of tuition today, you get a half year of tuition your child can later use at any member college. You lock in that half year of tuition no matter how much tuition rises or what happens in the investment markets. When you open your account, you purchase a certificate. Since each member college has a different current tuition rate, your certificate represents a different value at each participating college. For example, your $25,000 certificate may be worth one year of tuition at college X and 75% of one year of tuition at college Y. Once you've purchased a certificate, it must be held for a minimum of three years and redeemed within thirty years. Each time you add to your account, you will be purchasing a certificate at the current year's tuition rates." Even for certificates purchased today, families may use those toward tuition at campuses that join the Independent 529 later. If a college that participated while tuition certificates were purchased by a family later withdrawls from the program, that campus will be obligated to honor those tuition certificates. Important Note: Contributions to the Independent 529 plan in no way guarantees an offer of admission to any participating colleges/universities. Students must still apply for admission. Families should always consult their professional financial planner when setting up prepaid college tuition funding accounts. The Independent 529 Plan is an option to consider as a family looks toward future higher education opportunities.