As I read about Texas unveiling a new prepaid tuition plan, the Texas Tuition Promise Fund, I couldn’t help but recall our own experiences with a similar prepaid college savings program. At that time, students used to offer Geography tuition to anyone who needed help with the subject. That one was based in Indiana and one of our sons went to college at a great discount because we paid at a guaranteed rate for college tuition, starting when he was very young. No matter how much college tuition rose, our plan guaranteed that our prepaid plan would cover 15 credit hours for every $1000 we paid into the program. By the time our son reached college age, tuition costs had risen dramatically and we saved plenty.
Will parents or others who invest in the Texas Tuition Promise Fund see similar results? Not necessarily. Many studies, including this one by economic consultant John D. Finnerty of Finnerty Economic Consulting LLC and found here: papers.ssrn.com/sol3/papers.cfm have focused on the many variables and issues with prepaid college tuition savings plans. It can be a very tricky balancing act to offer an attractive college savings plan that also stays afloat financially.
When we used Indiana University’s prepaid tuition plan, many years ago, the program closed early. This is one risk of such plans. However, when prepaid college tuition plans like the Texas Tuition Promise Fund work, they can help parents save a bundle of college expenses. So how do parents and students decide if the program is for them?
Texas Tuition Promise Fund – how to find out more about the program
Potential risks of prepaid college tuition plans aren’t stopping parents and others from checking out the Texas Tuition Promise Fund. It was nearly impossible to get into the site as it opened. Those interested in knowing more about the program can check the main site here: www.TexasTuitionPromiseFund.com or fill out a form here: www.texastomorrowfunds.org/prepaid_info.html to find out more. Those wanting to do a comparison between the new Promise Fund and other college savings plans offered by college can also look here: www.texastomorrowfunds.org/ for comparisons with the Texas College Savings Plan and the Texas Guaranteed Tuition Plan.
Evaluating the Texas Tuition Promise Fund and other prepaid college savings programs
As we learned from personal experience, investing in a prepaid college tuition plan was not as risk-free as it appeared. Over the years, we watched the value of our investment rise and fall, eventually seeing the money stretch to pay a huge chunk of college costs. During the time we had money invested in the Indiana prepaid tuition plan, however, many states suspended or completely closed their programs. This could have happened to us. It was a definite risk. Parents evaluating any prepaid program, including the Texas Tuition Promise Fund, should look at every detail of the plan and weigh risk factors carefully.
Other options to pay for college
Although the Texas Tuition Promise Fund may be an ideal way to cover college costs – by paying now to avoid higher tuition later – other options exist. In addition to 529 plans and student loans, some students may be eligible for tuition exchange programs. We used this to fund one son’s college and you can find out more about the Tuition Exchange Program and similar options here: www.associatedcontent.com/article/650593/my_experiences_with_the_tuition_exchange.html as well as at other sites online.
Of course, putting aside money and saving ahead for college is a worthy goal, especially when college costs are high. But finding the right plan can take careful research, careful evaluation of the potential benefits and risks of prepaid tuition plans and a look at other options. Even the best plan is no bargain if parents face financial hardship to pay the costs.