Private College 529 Plan, a prepaid tuition plan for nearly 300 private colleges and universities, has a new president who has plans to encourage more institutions to join its network.
Robert (Bob) Cole, the former director of Strategic Partnerships and Community Impact at American Student Assistance, succeeds Nancy Farmer, who led the organization for 12 years.
Cole says one of his top priorities is to “hit the road” to encourage more institutions to join the plan. He tells ThinkAdvisor that savings in the plan function as a hedge against not only rising college costs but also market volatility because all contributions are applied to tuition costs. “There are no additional fees,” says Cole.
Here’s how the plan works: Contributions take the form of tuition certificates, which are applied to the cost of tuition of participating schools for that year and the tuition levels are reset annually. Private College 529 calculates all account contributions made during the year and keeps a running tab, which families can view regularly, of how many tuition credits have been accumulated per all 292 participating schools.
If a student ends up attending one of the participating schools, which include MIT, Duke, American University and almost 300 more institutions, those credits will be used to offset tuition costs and other qualified fees. They can’t be used for room and board.
If a student doesn’t enroll in one of the participating schools, the account balance can be transferred to a traditional 529 savings plan with no penalties but the earnings, which are tax-free, are capped at a 2% annual gain. The maximum losses are also capped at 2% annually. Certificates must be held for 36 months from the purchase date before they can be redeemed and they can be used at any of the participating schools for up to 30 years.