Buy VA prePaid with VAinvest money--good idea?

[Anonymous]

We live in VA and have 2 children: 3rd and K aged and have been funding VA529s for each with the goal of saving half of the projected cost of 4 year private university (tuition + room & board) for each. I’ve been contemplating purchasing 8 semesters of VA prepaid for the older child—we have about this amount in this child’s 529 already. My thinking is that between both kids the chances are probably better than 50-50 that at least one of them will go to a VA University and if my older child doesn’t go to a VA school I can transfer it to the younger child. I will continue to fund a smaller amount in the older child’s 529 for room & board and increase the amount I invest in the younger child’s 529. The risk in this approach is that if neither child goes to a VA school, I don’t get much value out of the prepaid plan. Any thoughts on in this strategy?

[Anonymous]

We have done the same, although we bought the prepaid for both children. I think of it as the conservative part of our college portfolio. If they do not go instate we get passbook interest rates (or these days 0 ) but our initial investment is still whole. For the funds outside of prepaid and 529, we can be more aggressive.

[Anonymous]

Just realize that you will be very tempted to pressure your kid to go to a Virginia school. And who knows what Virginia schools will be like in 15 years? Who knows what the entire education system will be like?

I would preserve your options, not lock in now.

[Anonymous]

You aren't really "locking in" if you do the prepaid. You can always just withdraw the funds and use it to pay for any college, public or private, not just in VA.

[Anonymous]

OP here. Thanks for the good comments. I am mindful about pressuring my kids on where they should go. Given NoVA's growth, affluence and focus on education, I am not too concerned that VA public universities will go down the tubes in the next 10-15 years.

[Anonymous]

Anonymous wrote:Just realize that you will be very tempted to pressure your kid to go to a Virginia school. And who knows what Virginia schools will be like in 15 years? Who knows what the entire education system will be like?

I would preserve your options, not lock in now.

As 15:45 said, it isn't a total lock. You get what you put in back. So you can consider it the conservative part of your balanced portfolio.

[Anonymous]

I bought VA pre-paid 12 years ago for both of my kids. My son is now at University of Virginia and my daughter is in high school. This was my best investment ever as I looked back what the stock market was performance for the past 12 years. If I invested my pre-paid money in S&P 500 index for the past 12 years, I don't think I have enough money to pay for even two years of my son's tuition of VUA. As PP mentioned, you can always get you principle amount back plus some interest.