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| Advantages |
The advantages of section 529 college savings plans are as follows:
1) Section 529 college savings plans are considered assets of the account owner and not the beneficiary that is why it influences little on financial aid eligibility.
2) Very high cumulative contribution limits, typically around $235,000 per beneficiary and as high as $305,000 per beneficiary.
3) You can choose any college you like but it must be an accredited post-secondary institution.
4) College savings plans have flexible contribution options, such as age-based asset allocation strategies and risk-based asset allocation strategies. You may select professionally managed funds or index funds.
5) Can enroll at any time.
6) No date by which funds must be used.
The advantages of section 529 prepaid tuition plans are as follows:
1) Peace of mind. Parents who contribute in a prepaid tuition plan know that it will keep pace with the faster-than-inflation increases in college tuition, letting them lock in future tuition rates at today's prices.
2) The full faith and credit of the state guarantees the most state prepaid tuition plans.
3) The return on a prepaid tuition plan is often larger than typical return on a bank savings account or certificate of deposit.
4) Low risk. Prepared tuition plans have lower risk if compared to college savings plans. This fact is very attractive.
5) Some states let you invest funds by charging it to a credit card. If you usually pay out your balance in full each month, and your credit card proposes rewards for charges, you may be able to get additional rewards for your investment.
6) Prepaid tuition plans allow each parent to pay a specified percentage of college costs, therefore they are useful in divorce cases. because they and because the parents can use a lump sum contribution to discharge their obligation.
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