ST. LOUIS - An effort by private colleges to help families save on tuition costs turned 15 this month. Private College 529 Plan (formerly Independent 529 Plan) was the brainchild of private college officials, who sought a way to help families afford private college.
Since its founding, there have been more than 6,000 tuition redemptions totaling more than $100 million at participating colleges and universities. "Fifteen is an important milestone allowing us to celebrate the families who have used prepaid tuition at hundreds of colleges and universities.2 Robert Cole, president of Private College 529, said. "Tomorrow's tuition at today's prices will be a great deal for decades to come."
In 1997, soon after Congress allowed states to operate college savings plans under section 529 of the tax code, business officers from seven private colleges in the south met. Those leaders recognized that state universities were likely to gain an advantage from 529 plans and "private colleges needed to come up with a competitive product," according to Thomas Kepple, then of Rhodes College and a leader of the group.
"We needed to find a way to offer a guarantee to parents, so their sons and daughters could attend private colleges and universities at reasonable prices," Kepple said. He later became president of Juniata College.
From those early meetings grew a larger and larger group of private school officials who realized it would take congressional action to enable their institutions to operate a prepaid tuition program. Congressional approval finally came in 2001, but it took another two years before federal administrative actions allowed the Plan to launch on Sept. 3, 2003.
There are more than 100 plans established under section 529 to help families pay for college, but Private College 529 is the only plan not run by a state. A group of nearly 300 private colleges and universities operates the Plan, guaranteeing prepaid tuition owned by families can be used at any member institution. The schools also bear the investment risk, so families don't worry about stock market downturns. Families pay no fees.
By prepaying, families potentially save thousands of dollars in future tuition increases, making affordable an education at a wide range of large research universities, liberal arts colleges, faith-based institutions, STEM universities and more. "From the start, Private College 529 was about colleges and universities taking the financial risk of guaranteeing tuition for families," noted Timothy R. Warner, chair of the Private College 529 Board and vice provost at Stanford. "Our participating schools provide peace of mind for families that their college savings are protected," he added.
That appealed to James Ting, of Palo Alto, Calif. His daughter, Emily, graduated from Mount Holyoke College, with her tuition prepaid through Private College 529. "The Plan put our mind at ease," Ting said. He calculates they saved more than 20 percent by prepaying, and she graduated with no debt 1
Private College 529 has member institutions in 38 states and accounts are owned by families in all 50 states and the District of Columbia.
Private College 529 Plan launched in 2003. It is authorized under Section 529 of the Internal Revenue Code. It is the only 529 plan not operated by a state government. Private College 529 is owned by nearly 300 private colleges and universities nationwide. The institutions, collectively the Tuition Plan Consortium, LLC, offer prepaid tuition that can be used at any member or any that join in the future. Ownership of a Private College 529 account does not guarantee admission to any institution or affect the admissions process. For more information, please visit privatecollege529.com.
1 This example may not be representative of all investors' experiences.
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