Reply to Va Education Savings Trust vs. Va Prepaid Education Program

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[quote=Anonymous][quote]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%. [/quote]

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.  [/quote]

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