Reply to 529 question - Maryland. Advice needed!

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]MD's prepaid plan is better than most states' prepaid plan because whereever you go (in-state or out-of-state) you will get paid the in-state tuition (technically the weighted instate tuition but it works out to pretty much be the  UMD-CP tuition).

So you have to ask yourself whether you think in-state tuition will rise at a faster rate than your alternative investment (whatever mix of stocks and bonds), and whether you'd rather have U-MD tuition guaranteed (subject to the legislative guarantee) or the chance for more/less on your own.

I don't think the risk of not getting your prepaid tuition is that significant-- the plan is currently 125% overfunded and the way the legislative guarantee works is the governor has to include the funding in his budget and the legislature would have to affirmatively take it out if there was a shortfall, which to me seems a little unlikely all things considered.

We tend to be conservative financially and have both types of 529.  We like knowing that 4 years of in-state tuition and fees are paid for, but we also have some money in a separate 529 to cover additional costs like housing, or private school.

BTW, anyone with 200k in the MD 529 (investment plan) might want to consider moving it to a lower expense plan, like Utah.[/quote]

I looked at the 529 prepaid plan, and it looks like the growth is much lower. That would be the only drawback, but I guess if you assume that because the tuition would be weighted and not at the then-current tuition amount, growth is not much of an issue (?)[/quote]

I'm not really sure what you are asking.  IIRC MD had a number of years where tuition was increasing sharply and then for a few years they kept tuition flat (although they increased some fees).  So, in that sense your investment would not have increased much in those years  I also think it's fair to say that compared to a stock market that went up 25% last year, the prepaid plan is never going to look good.  However, when the market crashed in 2008, we didn't have to worry about losing money either.  You have to judge for yourself what risks you'd like to take on, vs shift to someone else.[/quote]

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