prePAID Tuition Offers Confidence Against Future Tuition Uncertainty

Tuition at Virginia public four-year colleges and universities has increased an average of seven percent a year over the last decade, according to the State Council of Higher Education for Virginia. Tuition at Virginia public two-year institutions also has increased, but not as steeply.

Families looking to avoid future tuition uncertainty may appreciate the ability to prepay tuition now with Virginia529 prePAID (prePAID). Benefits cover future tuition and mandatory fees at Virginia public colleges and universities for children currently in ninth grade or younger. A flexible tool in any college savings strategy, prePAID offers extended payment options and two pricing tiers to provide more affordable payment options.   

Although prePAID has been available to Virginia residents since 1996, there are several common misperceptions about the program that may cause some to overlook it.

Myth 1: Virginia529 prePAID means my child must attend a Virginia public school.
Myth 2: My child loses the benefits of prePAID if we move out of Virginia.

False on both. Your child can use his or her prePAID benefits at any eligible educational institution (true for all Virginia529 programs, actually) in Virginia or out of state, but the coverage level will differ based on the school attended. Generally, eligible educational institutions are ones that participate in federal student financial aid programs. Search for schools on the federal student aid section of the U.S. Department of Education website.

Myth 3: If my child earns a scholarship, I lose the money I’ve paid for my prePAID contract.

Also false. If your student earns a scholarship, you have several options for your prePAID contract. You can:

• Hold onto the prePAID contract and apply it to graduate school.

• Roll over the value of the prePAID contract into another Virginia529 savings program such as Virginia529 inVEST. Then use it to pay for qualified higher education expenses not covered by the scholarship or for graduate school.

• Change the beneficiary of the prePAID contract to a family member.

• Request a refund up to the amount of the scholarship. The refund is exempt from federal penalty but earnings will be subject to federal and state income tax.

Enrollment in Virginia529 prePAID is limited to December 1 through March 31 each year. Although the 2014 enrollment period will end soon, families still have time to learn about prepaying tuition at Virginia529.com. Explore the full array of contract and payment options using the site’s prePAID calculator. Then apply online and enter the code PREPAID to waive the application fee.  The first contract payment is not due until May 1.

About Virginia529 College Savings Plan: Virginia529 is a 529 college savings plan that offers flexible, affordable, tax-advantaged savings for qualified higher education expenses through its four programs: Virginia529 prePAID SM (prePAID SM), Virginia529 inVEST SM (inVEST SM), CollegeAmerica® and CollegeWealth®. More than $49 billion in assets under management and 2.3 million accounts as of January 31, 2014 make Virginia529 the largest 529 plan available. For more information on Virginia529’s college savings options, visit Virginia529.com or call 1-888-567-0540 to obtain program materials. These include information on Virginia529 programs, investment objectives, risks, charges, expenses and other important information; read and consider them carefully before investing. All investments are subject to risk, including the possible loss of the money you invest.