Reply to How many here do not have a 529 savings account, on purpose?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]We were poor when kids were born.  I did not want my kids college tuition in a 529 to tank if the stock market tanked, or if we were still poor, incapacitated or dead.

So, we bought the   MD Prepaid College Trust for both kids for the maximum years allowed.  This was guaranteed by the State Govt and money was kept aside to pay for it in the state budget.  This Trust is not taking new enrollments anymore and not being offered anymore.   If you had any money left in this program, you can also convert it into a Roth for your kid.

Our kids eventually went in-state, got full merit tuition scholarships, and much of the trust was not used.  We also now are UMC, and to just pay from our cash flow for incidental expenses was very easy.  So, now all that is over, we are in the process of converting it to Roth.

So long story short.  We only bought for both kids tuition for 4 years of college each. Total cost for both kids was 80K.  We spent around $60 K total for other costs (room, board, food, travel, socializing)  for 4 years each.  So, 2 kids, both did double majors in STEM subjects. In total it cost us 15K per year, per child - or $120K total for two kids for other college costs.  We did not pay tuition.

Because they got free tuition from the college, the money invested for prepaid tuition will be converted to Roth for them. In retrospect,  we saved the bare minimum ($80 K for both kids) for college and the opportunity cost of that money not being invested in stock market was not greater that the insurance factor of prepaid tuition or to hedge against increase in tuition.

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To add - would we have invested in the MD Prepaid College Trust knowing what we know now?  Probably yes.  It was a good insurance policy for cheap.  We did not know that both our kids would turn out to be such super high achieving kids in the public school system. [/quote]

Wasn't there some crazy controversy over this program recently?  https://marylandmatters.org/2023/04/07/lawmakers-moving-forward-with-plan-to-abolish-maryland-529-board-settle-claims-for-pre-paid-college-trust-accounts/

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Yes.  It was [b]costing the state quite a bit in lost revenue[/b]. They had to pay the tuition costs that were locked in through this program decades in advance.  So, the new settlement is that people who bought this prepaid tuition, the state will honor that committment.  Also,  money that is not spent by the account holder can be converted to Roth for the beneficiary.  And yes, they stopped this program and have grandfathered it -  because it was a [b]steal[/b] for the MD residents but a money loser for the state.

Some of the controversy happened also because when they tried to grandfather and dismantle the program, some existing parents saw disruption in payments.  It was just bad luck. They were in the middle of the transition in the program and the process.   In any case, we were one of the parents, but since what we were paying for our kid's room and board was so miniscule, we just paid from our cash flow. And waited for the full resolution of the issue. [/quote]

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