Two Questions for Finance Whizzes, Please

Parents Forum
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<p>Thanks for any help in advance:</p>

<p>Scenario: Two bright high schoolers, two full-pay probables due to frugal living but still hardship for us-we have no state res due to overseas post.
slight chance of some aid(10,000 of 50,000?) when two are in for two years together, but don't want to assume.</p>

<p>1) Should we max our gift aid through PA529 (we are not in Pa therefore no tax break there)--present mix paying about 7% [72,000 from each parent=total $288,000)--am not sure if that would be spent, assuming 20,000 non-taxed interest annually and total 400,000 in college payments. Am I being too optimistic about returns here? It seems like Vanguard performs better than most.
Would it pay to just incur the penalty and loss of tax break at the end of their time in college?</p>

<p>2)What do you think of prepaying tuition? What are tha average rates of tuition increases at Ivys?</p>

<p>Thanks so much. (BTW, lots of merit aid but just not at the optimum fits)</p>

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<p>"lots of merit aid but just not at the optimum fits"</p>

<p>Marie - Could you clarify the situation a little? One child is a senior and the other a sophomore? US citizen posted overseas by corporation or federal govt with last residence in PA? Prepaying tuition where, for purposes of avoiding tuition increases for child #1 or child #2? Reason for creating a 529 account if younger child will be attending college in two years? Reason full-pay is a hardship?</p>

<p>(I'm having trouble getting my arms around the issue.)</p>

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<p>NewHope33,
Yes, one child a senior, the other a sophomore. Yes, Us citizen, just using Pa because it is a good deal;yes, prepaying to avoid tuition increases?--what is the average? ; 529 for tax-free interest; full-pay is hardship because 400,000(2 fullpay) is a chunk of funds.
Thanks</p>