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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Is this penalty something specific to the VA prepaid plan?  I did read the Maryland plan carefully when we bought it (10 years ago) and did not find anything of that sort in the plan.[/quote]

No, it is not specific to VA.  In general, if you convert prepaid back to cash, you don't do as well as if you never bought into the prepaid.

(Yes, the word "penalty" is used here loosely.  I don't mean an actual penalty, but rather that the value they give you in cash will not be actuarially fair.  So, to the person who went on, and on, and on.... OP you can read all that, or you can just follow my advice and read the fine print carefully.  If this still isn't clear, get a professional to help.)[/quote]

MD was the exception to this rule,  at least when we bought (and I am a different poster).  In MD the rule when we bought was that they would give you the full tuition cost for UMD College Park*  if you decided to go to school out of state (or in-state private).  That is essentially no penalty for going out of state and much better than things like the Independent College 529, where they give you something like actual investment returns or 2%, whichever is lower.  However, I have heard that MD may have changed this and I have been meaning to try and investigate whether they did, and if they did whether they are going to try and apply the new rules to people who bought under the old rules.  Worst case though I think they would probably let you roll your prepaid investment account into the personal college savings plan.

*Technically they promised to pay you the average  tuition for all students enrolled at 4 year colleges, but since College Park has by far the largest enrollment it essentially worked out to be the same as College Park tuition.[/quote]

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