Should you choose a 529 or a prepaid tuition plan?

With a college savings plan, savers make contributions that grow tax free. A prepaid tuition plan lets savers pay today's tuition rates for future college students. Many families wonder which plan they should choose. Both 529 plan types offer advantages. A college savings plan also covers non-tuition costs.

What is the difference between a 529 and a prepaid plan?

529 college savings plans can be withdrawn tax-free to pay for qualified higher education expenses, which include tuition, fees, supplies and equipment, computers, internet access and even some room and board. Prepaid plans, on the other hand, usually only cover the costs of tuition and fees. 2. Prepaid Plans Aren’t for Everyone

Can a saver open a private college 529?

Savers can also open a private college 529 to prepay tuition at one of 300 private colleges. Coverage: Currently, only nine states offer prepaid tuition plans. Most prepaid tuition plans only cover tuition costs. They do not typically include room and board, textbooks, or other college costs.