Va Education Savings Trust vs. Va Prepaid Education Program

[Anonymous]

Can't decide which plan to pick? Would appreciate feedback regarding reasons you picked on plan over the other.

[Anonymous]

We have a couple of years of the prepaid tuition. I didn't want to worry about fees for managing the accounts and I didn't want to worry about investment losses. We will probably buy 2 more years of tuition.

I was also swayed by a friend (who is very smart and her very smart husband who went with the prepaid). I don't know their reasoning other than they wanted to lock the price in.

I'm interested to hear what others say as well.

[Anonymous]

I looked at both and went with VEST. We did not go with pre-paid because it only gaurentees pre-paid for Va in-state schools. Although the money can be used at other schools, it will essentially be treated as if the money was just invested at a low interest rate. It also does not pay any lab fees, course-specific or optional fees, computers, books, etc. It is only tuition and mandatory fees.

I would rather have much more control over my money than to feel locked into a state school in Va while still having to pay various fees. You can use VEST to pay for any expense related to college -including books and room and board. If you buy into pre-paid and your child receives a scholarship, it actually does not benefit you at all.

[Anonymous]

Anonymous wrote:Can't decide which plan to pick? Would appreciate feedback regarding reasons you picked on plan over the other.

You will have to wait about 10 months before the next enrollment period for the prepaid tuition plan i think. It just recently closed.

[Anonymous]

We are not expecting a scholarship and if one happened to be available, it would be used for room and board.

Also, I considered the costs of out of state schools and we have made executive decisions that our children will go to VA schools for college as it is WACKY expensive even to go to a comparable out of state school -- I'm not paying $27K for UMd. or UNC of U.Fl. (or more) when my child can go to a state school for $12K or less (using today's numbers and tuition only comparison).

So, once I realized how expensive out of state school tuition has become, it clarified the question for us... and we are effectively saying that our kids are going to go to Va. colleges (and there are enough to choose from that it will be fine).

[Anonymous]

Prepaid tuition open season ends in Feb/March every year. Then they recalculate the numbers and set the price for the next year.

[Anonymous]

Just looked it up. Open season for VPEP is usually Dec. 1st through March 31st. Rates change year to year and they change based on the age of your child.

[Anonymous]

Went with VEST because if short-sighted Republican administrations keep cutting funding to state universities, I will not want my children attending a public institution.

[Anonymous]

The price difference for my kids on the prepaid -- DC1, entered prepaid tuition at age 2, paid out over 16 years monthly, so 4 years of college available at age 18 -- -that cost $150 per month for 16*12 months. DC2, entered at 6 months (about 1 year later), paid out over 17.5 years monthly, so 4 years of college available at age 18 -- that cost $181 per month for 17.5*12 months. That was the difference in cost change based on what happened in about one year. In other words ... with the prepaid you get AT LEAST what you will get in the VSCP, but much more if your child wants to go to a VA state school (and sorry, I cannot agree that any budget cuts will ever make UVA, William & Mary, VA Tech, or other schools "bad" schools). If your child wants to go to some other school, your VPEP funding is basically the same as if you had started with a VCSP. No brainer really, if you are interested in VA plans (i.e., VA resident and get the tax break). If you want other plans, look at the Independent School 529 or other plans.

[Anonymous]

we did both, there's no reason you can't. we prepaid 2 years for each of our 2 kids, with the assumption that at least one of them will go to a va school and the contracts are transferrable within a family. when that was done, we started pushing money into a VEST account.

[Anonymous]

Anonymous wrote:Can't decide which plan to pick? Would appreciate feedback regarding reasons you picked on plan over the other.

The 575 basis point load on the American Funds 529 really bugs the hell out of me, but that's where we have been socking the money away.

Lately I've been thinking of just halting that (I have $40,000 in there for two kids) and switch to buying prepaid tuition when the next open enrollment period begins. Diversify.

[Anonymous]

Anonymous wrote:The price difference for my kids on the prepaid -- DC1, entered prepaid tuition at age 2, paid out over 16 years monthly, so 4 years of college available at age 18 -- -that cost $150 per month for 16*12 months. DC2, entered at 6 months (about 1 year later), paid out over 17.5 years monthly, so 4 years of college available at age 18 -- that cost $181 per month for 17.5*12 months. That was the difference in cost change based on what happened in about one year. In other words ... with the prepaid you get AT LEAST what you will get in the VSCP, but much more if your child wants to go to a VA state school (and sorry, I cannot agree that any budget cuts will ever make UVA, William & Mary, VA Tech, or other schools "bad" schools). If your child wants to go to some other school, your VPEP funding is basically the same as if you had started with a VCSP. No brainer really, if you are interested in VA plans (i.e., VA resident and get the tax break). If you want other plans, look at the Independent School 529 or other plans.

This. We have a VPEP for DC 1,2,and 3. DC1 just started college, sadly, out of state. For one phone call, 2 forms, and $10, our VPEP was transferred to a VEST. It seems well worth the VPEP to me, just on the chance DC would go to a Va state school (where we would have had much more bang for our buck, but we haven't lost money converting the VPEP to the VEST).

[Anonymous]

Went with VEST because if short-sighted Republican administrations keep cutting funding to state universities, I will not want my children attending a public institution.

Is it possible to go through one thread without some moron trying to drag politics into it? Get a life people!!!

[Anonymous]

The 575 basis point load on the American Funds 529 really bugs the hell out of me, but that's where we have been socking the money away.

This should be the deciding factor, if it is true for VPEP, to NOT do the VPEP. Why would I want 5.75% of my principal to automatically go into fund costs? That right there negates any sort of gains I could get. The VEST fund loads are less than 1.5%.

[Anonymous]

The 575 basis point load on the American Funds 529 really bugs the hell out of me, but that's where we have been socking the money away.

This should be the deciding factor, if it is true for VPEP, to NOT do the VPEP. Why would I want 5.75% of my principal to automatically go into fund costs? That right there negates any sort of gains I could get. The VEST fund loads are less than 1.5%.

No, it's not true for VPEP. VPEP is PREPAID tuition - you are not "investing" in any funds. The plan makes investments of the money but that's not really relevant to you as an individual. You are simply "buying" future years of tuition. For example, the price today for one year of college tuition in 2022 is set at $xx - you pay that price, and you get one year of tuition when your kid goes off to school in 2022. You don't have to worry about growth of your investment - that is the whole point of VPEP.

PP was referring to the other Virginia 529 plan, which is CollegeAmerica. That is the plan that you need to do through a broker and is the one that uses American Funds. VEST, another 529, offers investment options in funds but not American Funds. VEST uses some Vanguard and other funds and has a bunch of different age-based portfolios.