I am loving the prepaid now that DS is a freshman in college. I paid $14,000 total upfront for it the year he was born. He ended up going to a private VA College but it still pays $10,000 a year so I think it was a good investment. Would have been worth way more if he went to a public VA school. The thing I like about the plan is that it pays for exactly what you are saving for and you do not have to be concerned about how well your stocks or mutual funds perform.

Prepaid is not for everyone. But it is convenient if you have the means to "prepay" tuition within 4 years of signing the contract. A big headache is taken care off. Basically, by paying a premium upfront, the state is taking on the risk on your behalf. Of course prepaid tuition does not cover everything but you may want to split your savings into 1) a prepaid and 2) mutual fund account

Invest is certainly a better deal given lower fees. You get what you pay for....if you go through a broker, for College America, you have a wide range of investment choices but fees are higher..

Here is my understanding, with a clear preference for invest (low fees, can deduct more of the contributions):

Prepaid: you CAN use this for private or out of state tuition, the language says you get the average instate VA tuition amount OR your contribution + reasonable/actual rate of return, whichever is less. The "rate of return" has been basically nothing the past few years, which makes me nervous about private or out of state.

Invest: choice of several index, blended, or life cycle funds, including some vanguard options. Small additional management fee. One bonus: each invest combination of account owner/beneficiary/fund choice is treated as a unique contract with a separate deduction up to 4,000/year. So you can deduct much more per year using the invest options compared to prepaid/america/wealth if you plan to put in more than 4k/year per parent/kid.

College America: have to go through brokers. Don't see the logic in paying the additional fees to use American funds.

College wealth: this appears to just be a bank account with 2% interest through BBT or Union first. Fine option if you are close to college age and just want to park it for a couple years, but not good if you are looking for your money to grow.

I don't know the VA plans because I live in MD. But in general, pick the one that looks like a tax-sheltered mutual fund. In many states, the tuition pre-payment plan will build a lower-than-market expected rate of return into your monthly payments (because colleges don't want to assume much risk with respect to future tuition hikes and market performance). This may be unfair to the VA plan, so do your own investigating, but it seems to be a fairly common practice among pre-pay tuition plans.

Most states allow you to use pre-paid tuition at any other college, so that's not the issue.

The issue is that your investment returns in the tuition pre-payment plan will probably be lower than the market returns in the mutual-fund-like plan.

The state run vest has the lowest fees and is tax deductible

bump! Why doesn't anyone answer??? I have no idea which one to pick.

College America?
College Wealth?
or
Virginia 529 InVest?

I don't want the prepaid plans that limit us to Virginia schools.