Between 1986 and 1999, 21 states adopted some type of prepaid college tuition plan. As of 2009, only 13 of those states were accepting new enrollment in the plans (The Department of the Treasury, 2009).
In the early years of the prepaid tuition programs, they appeared to be a win-win situation. Parents of future college students could lock in tuition rates years in advance of their child attending college and gain the tax advantages of a 529 account, without the risks related to investing in the stock market. The schools receiving these PPT funds could invest the money over time, and could depend on steady return on their investments, and a solid base of future students (Clark, 2011). While the advantages seem simple on the surface, the programs have been fraught with issues. These issues have resulted in states having to bail out some universities, and have also l...
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...ok from Parents. (2009, March 23). Community College Week, p. 5.
Baird, K. E. (2006). Do Prepaid Tuition Plans Affect State Support for Higher Education? Journal of Education Finance, WINTER 2006(), 255-275.
Clark, J. B. (2011, October). Smart Ways to Save For College. Kiplinger’s Personal Finance, 60-62.
Doyle, W. R., McLendon, M. K., & Hearn, J. C. (2010). The Adoption of Prepaid Tuition and Savings Plans in the American States: An Event History Analysis. University of Georgia: Springer Science+Business Media, LLC.
Klein, A. (2007). Prepaid-College-Tuition Plans Feeling Fiscal Pressure. Education Week, 26(29), 15-18.
Smith, S. H. (2012, June). Should You Prepay College Tuition? Black Enterprise, 34.
The Department of the Treasury. (2009). An Analysis of Section 529 College Savings and Prepaid Tuition Plans (GPO). Washington, DC: Government Printing Office.
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