PRIVATE COLLEGE 529 PLAN

All contributions to your account during the Plan Year (July 1 – June 30) are aggregated into a single Tuition Certificate, which represents a percentage of that same year’s tuition and fees at each member college and university. The percentage each Certificate represents will vary since tuition rates differ at each college. You can prepay and lock in a percentage of one year or multiple years, it’s up to you.

When you contribute to your account over multiple Plan Years, you will own multiple Tuition Certificates, one for every Plan Year you contributed to your account. Tuition Certificates purchase tuition at the current year rates for that Plan Year.

Here’s how much $30,000 in contributions during one Plan Year could prepay at three different sample colleges.

In 10 years: If College A’s tuition is now $90,000, College B is $80,000, and College C is $55,000, the Certificate value of the $30,000 is redeemable for the same locked-in percentage, now worth $45,000 at College A, $48,000 at College B, and $41,250 at College C.

When your child enrolls at a member college years down the road, the college will honor the percentage of tuition you locked in there, guaranteed.

You do not need to know which college your child will attend, and you have options if your child attends a college outside of our network. See more about this in our FAQs below.

As tuition increases, so does the value of your Tuition Certificates. Your Certificates are guaranteed to increase in value at the same rate as the cost of tuition and fees at each member college. Since the Plan began in 2003, the median tuition and fee increase across our member colleges has been 4.29% per year. If your Certificates purchase 50% of one year of tuition and fees at one college and 75% of one year at another, you will own those percentages of one year no matter how much tuition increases.

Like other 529 plans, contributions grow tax-deferred, and distributions are tax-free as long as the funds are used for qualified expenses. And thanks to recent legislation, 529 plans can now be used for private k-12 expenses, student loan repayment, and even to fund a Roth IRA.

There are no federal tax deductions for contributions to 529 plans, but if you live in a tax parity state, like Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio or Pennsylvania, contributions to any 529 plan, including Private College 529, may be eligible for your state’s tax credit or deduction. Get more information about tax benefits here.

You can contribute to your account with one lump sum or make annual, quarterly or monthly contributions over multiple years. Accounts can be opened with as little as $25, but the more you contribute to your account, the larger the percentage of tuition you will lock in at each college. Since tuition rates typically increase each year, contribute as much as you can as early as you can to lock in lower rates. Tuition Certificates must be held for 36 months before they can be redeemed at a member college, another reason to save as much as you can as early as possible.

Already saving in a 529 plan? You can roll over funds from an existing 529 plan into Private College 529 Plan at any time.

Contribute one lump sum

In this example, a family opens an account for their 8-year-old child and contributes one lump sum of $50,000. Their contribution locks in 107% (or 1.07) years of tuition and fees at the average of our member colleges. Ten years later, they still own 1.07 years of tuition and fees but, with a projected tuition increase of 4% each year, the tuition value of their account is now worth $74,000 (with $24,000 in tax-free growth).

Note: This example uses the average across all member colleges for demonstration purposes. When you save with Private College 529 Plan, your Tuition Certificates purchase tuition at then-current rates for each college in the Plan (rather than the average).

Save over multiple years

In this second example, the same family opens an account, this time with $21,500 followed by monthly contributions of $250. Ten years later, the tuition value of their account is now worth over $67,000, enough to purchase nearly a year (.97) of tuition and fees for the projected average cost of our member colleges.

It’s important to note that since Tuition Certificates must be held for 36 months before they can be redeemed, the family would not be able to redeem any Tuition Certificates held for less than 36 months. Saving more in your account as early as possible will help to ensure your prepaid tuition is available when you need it.

Saving early pays off

In both scenarios, the family can enjoy considerable tax-free savings on the future cost of tuition. But, in the first example, they’ve locked in a better tuition rate early and therefore net over $7,000 more on the value of their prepaid tuition.