Independent 529 Prepaid Tuition Plan Offers Stable Growth in an Unstable Market
In this time of financial turmoil, the only sure thing for many college-savings plans has been decline and volatility
(Vocus/PRWEB ) March 18, 2009 -- In this time of financial turmoil, the only sure thing for many college-savings plans has been decline and volatility. That's not the case for families who enroll in the Independent 529 prepaid tuition plan. All of the risk for investment returns rests with the participating colleges, not investors. Families lock in future tuition or a portion of future tuition, at today's rates, plus an additional discount that varies from school to school, and the colleges commit to cover the difference between today's price and future price and bear the risk for investing the money.
Dickinson last year enhanced its stake in the I-529 plan, guaranteeing families an annual rate of return on their investment of an unprecedented 4 percent above the rate of increase in tuition. The college's previous rate of return was 1 percent above inflation. The 4 percent return above inflation is double the next best rate offered by any of the 274 colleges and universities participating in the plan. Each member institution sets its own rate.
The I-529 Plan freezes the price of higher education at the tuition rate during the year of investment, guaranteeing families a return on their investment equivalent to annual tuition price increases, compounded over the holding period. Historically, tuition increases have been between 5 and 6 percent a year at Dickinson and its peer institutions.
Therefore, the inclusive return equals tuition increases (average of 6 percent) plus 4 percent annually, for a tax-free return of around 10 percent, depending on the tuition increase. Returns accumulate and compound free of federal income taxes and all fees are paid by the I-529 consortium of participating colleges and universities.
The Independent 529 Plan is overseen by Tuition Plan Consortium, a nonprofit collaboration of schools created to establish the only 529 prepaid tuition plan specifically for private colleges and universities nationwide.
For information about Dickinson College's I-529 plan, contact David Walker, associate vice president and associate treasurer at Dickinson College, at 717-245-1010. More information about the college's I-529 plan is available at: http://www.dickinson.edu/news/nrshow.cfm?1320.
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