Independent 529 plan

[Anonymous]

Hi all!
We are a middle class family with a 5th grader. We are exploring some of the 529 options since we earn enough that we won't qualify for aid, but don't earn enough to pay for a private college tuition comfortably and don't want to accrue too much debt. I like the idea of the Independent 529 since my old school is on there and I think it would be a good fit for my child if she can get in. If any of you have gone this route, we'd appreciate your thoughts about why you did...and if those of you who decided to go another way would share your thoughts, that would be great too.
Thanks!

[Anonymous]

Prepaid tuition comes down to a bet that the increase in college tuition will outpace returns on alternate investments. I have wrestled with the same question. I'm not confident that returns on stocks will be high in the coming 10 years (indicators suggest <2% annual). If tuition will increase faster than this, then it would make more sense to prepay tuition, though there are some reasons to think that tuition increases might moderate too.

After you have decided on whether to prepay, then you can choose which plan. If you are in MD, the prepaid plan can be used for the equivalent value at any school. The independent plan is somewhat restrictive.

[Anonymous]

When I looked into it, the earnings you get if you don't go to one of their schools was very low, so we do a combination of a traditional 529 and the MD prepaid plan (which gives you the College Park tuition and fees to spend if you go outside the MD system).

[Anonymous]

I invested in the prepaid plan when my kids were born, and I am so glad I did! My daughter's plan at the time for the 4 year university option was around $20,000 total, about what 1 year costs now. Instead of $80,000+, I have secured her 4 years of college for about $5000 per YEAR!. The parents of her peers who did not go that route when we did, but instead invested in the 529 general college savings account, do not have enough money to cover their kid's tuition for 4 years. They will be taking out loans for the last 2 years of school.