<p>For those parents who currently have kids in college and still have money in your college plan,whatever that might be, is there any sense in paying future tuition bills now with those funds in order to avoid the potential for hyperinflation which may result soon from the Wall Street mess? My daughter is still a senior in high school but it seems to make sense to pay as much as I can in advance and let the school take a bigger hit from the devalued dollar and decline in assets. If she was already in college and felt that she would not want to transfer, I would have already prepaid as much tution and fees as I could before the crash happened. I am not an accountant,tax expert or financial advisor, but it does make me wonder if this actually might be a good idea? Has anyone done this or thought of doing this?</p>
<p>My guess is that what's happening in the economy will stop the rise in college pricing. When wealth was growing and colleges had a line of people begging to pay full price they could afford to raise prices expecting no consequences. Right now they need to worry about many choosing colleges with price as a bigger consideration. Personally, I will not prepay.</p>
<p>It makes sense to prepay only if you can lock in the freshman year tuition rate. Then you save the average 6% raise per year. Unless you're sure that you can make more on your $ than the tuition increase will be it's a good deal. You lose what you could have made on the money if your child decides to leave the school - you then get the $ back without interest. If you prepay and cannot lock in the rate you lose any earnings you can make on the money as well as having to pay the yearly increases. Be careful and check with the school's policy - some will let you lock in the tuition rate, some won't, but most will be willing to take your $!</p>
<p>I'll be surprised if tuition rates stop increasing.</p>
<p>I have seriously thought about this option. I'm waiting till my daughter near the end of her freshman year before I actually do something. I will also prepay only 2 more years because DD will probably graduate in 3 or 3.5 years. She wants to save the money and do a Master degree somewhere in the Europe. It's cheaper than the study abroad option.</p>
<p>Harvard has a prepay option that permits you to lock in the current rate for however many years your kid has remaining. I was tempted but I never did prepay.</p>
<p>WUSTL also offers a pre-pay option that locks in the tuition rate as it stands freshman year. You can spread the payments out over 10 years. </p>
<p>Partners</a> in Education with Parents (PEP) Options</p>
<p>We decided to do it and borrowed against home equity (which had risen a lot in CA). Costwise, I believe it was a wash (savings on tuition increase versus cost of home equity loan) but you also have the advantage of the tax deduction and 10 years to pay off the expense.</p>
<p>I looked at it in 2002.
1. Independent529 required a 4 years before withdrawal (then in 2002)
2. Available funds for a prepaid tuition was down 40% from pre-911. I had to chance the likelyhood of a market recovery and continued low interest on student loans.</p>
<p>Do you know her financial package, all scholarships that she might get? It is different from school to school and it is way to early in a year to have this information. And it changes during admission process.</p>
<p>I think the issue can be flexibility. You need to look at the rules carefully for the 529's. What happens if the child does not go for example?</p>
<p>We prepaid for our daughter, a recent graduate at WUSTL, with good results. We have chosen to go this route again with our son, who has just started his first year at UChicago. Our motivation is partially financial, insofar as we are once again betting that tuition increases over the four years are likely to outstrip potential gains from investing the money, but also psychological. Not having to hold our breaths each time the announcement is made of upcoming tuition hikes is worth more in peace of mind than a dollar amount to us.</p>
<p>I considered this for D2 but ultimately decided against it. My college fund is also my emergency fund, as everything else is tied up in IRAs and 401(k)s. (Which, by the time the college fund is depleted, I'll be able to draw from without penalty.)</p>
<p>I prepaid. It is a good deal. You lock in the rate, no further tuition increase. It also give me a peace of mind knowing that the tuition duty is all taken care of. I did it last year when the market was still good, had I not done it, the then tuition budget probably were gotten evaporated a big portion. So, pay up now if you can. Now....I have to figure out how to do the graduate school......MBA two years, law, three, med, something like four....given the current economy situation, I am very concern.</p>
<p>^Moohead, lots of employers are paying for MBA. My tuition and few of my managers at different companies tuitions for both BS and MBA were paid by employers. Maybe you are looking for Harvard MBA, that I do not know. I got mine just from state school, couple of my managers got it from U of Michigan, which is pretty highly ranked and about 50 min. drive from where I live.</p>