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State Offers Options To Save For College-Bound

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By MARILYN BROWN | The Tampa Tribune

Published: August 1, 2008

When it comes to saving for college, Florida families have several options, most choosing the Florida Prepaid College Plan and the Florida College Investment Plan.

Of the two, the Prepaid College Plan is the most popular, with more than one million participants prepaying the cost of tuition, dormitories and fees.

Like the Investment Plan, the Prepaid College Plan is a 529 state-sponsored savings plan, named for the section of the Internal Revenue Code put into place by President Bush's 2001 tax package.

Families have bought more than 1.2 million plans since they were first offered in 1988. Investors have the option to cover local fees and dormitory costs, as well as supplemental tuition charged at some schools, such as the University of South Florida.

Below are sample prices on plans purchased last season for a newborn, though prices will change in the next enrollment period, which runs from mid-October through late January:

Four-year tuition plan

Lump-sum payment: $13,516.27

Five-year plan (55 monthly payments): $271.92 (Approximate total: $14,956)

Monthly payment plan: $93.12 (payments are made until the child enters college) (Approximate total: $21,231)

Two-year community college tuition plan

Lump-sum payment: $4,376.48

Five-year plan (55 monthly payments): $88.05 (Approximate total: $4,843)

Monthly payment plan: $30.15 (Approximate total: $6,874)

The Prepaid College Plan is guaranteed by the state, unlike Florida's other 529 plan, the newer Florida College Investment Plan.

The College Investment Plan allows Florida residents to contribute at least $25 a month from their checking or savings accounts, with a maximum contribution of $341,000 per beneficiary.

Like any investment, however, there is risk. Returns can fluctuate, so families could lose money.

But unlike the prepaid plan, the returns on the investment plan can be applied to any college anywhere and can cover such costs as books and off-campus housing. Families can open an investment plan year-round.

For information on Florida's Prepaid College Plan or the College Investment Plan, visit www.florida529plans.com or call 1-800-552-4723.

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