"For new enrollees the cost is significantly more than it had been in the past and I think people are taken aback by that," says Gary Pressley, president of Academic Funding Group in St. Paul, Minn.Continued below > > A prepaid tuition plan lets you purchase units of tuition for any state college or university at today's prices.A semester's worth of prepaid tuition purchased at today's prices would pay for a semester's worth of tuition at any future date.
"Give yourself a two-year lag time if you can," says Gary Pressley, president of Academic Funding Group in St. Paul, Minn.Parents who planned ahead and cashed out college costs years ahead of time were able to get much of their money out of the market before the recent downturn.They won't have to sweat over college bills.They're the lucky ones.Parents who waited in the hope of a rebound have a tougher task ahead.With tuition bills looming, they'll need to start cashing in some investments in a low market.
"The advantage of the account, earnings growing tax-free, is moot because you've got no earnings," says Gary Pressley, president of Academic Funding Group in St. Paul, Minn. The good news is many college savings plans will waive annual maintenance fees to in-state residents, people who make automatic contributions and people with large account balances, often $25,000 or more. The bad news?There are plenty of other fees to worry about. Several college savings plans charge you right from the get-go with one-time enrollment fees.
"Make sure you look at the fine print as far as fees are concerned," Pressley says."They may have different fees for residents and nonresidents." One detail you'll want to check out is minimum-balance requirements. "If there's a minimum balance that's required and your investments are not performing well and it dips below that minimum you may be assessed a monthly maintenance fee," Pressley says."The people who get nicked for those are the ones who can least afford it." Remember when it comes to state-sponsored 529 plans you've got a ton of options.Most state-sponsored college savings plans are open to nonresidents as well.