At today’s prices for a higher education, saving up for college is tougher than ever. But there are new enhancements to a popular plan sponsored by the State that can make the task a bit easier.
The State of Florida’s College Prepaid program dates back to the late 1980’s Since then, more than a million families have availed themselves of it. Among them, the family of Logan Lewkow.
“I was actually a ‘prepaid-baby’ myself. And then the very first thing we did outside of confirming insurance for our 4-year old was going ahead and getting her Florida Prepaid plan locked in with all the details behind it.”
Lewkow said the advantages were just too good to pass up.
“We saw it as one of those investments that we couldn’t turn away from. And the beauty behind it, especially the 529 plan, the beauty behind it is because of the flexibility. Because you get to pick and choose what you put into it every month.”
Sarah Kruse didn’t have the advantages of attending college under a Florida Prepaid plan. Which is why she was quick to look into it when she became a parent.
“I graduated from Florida State in 2013 (Go Noles!) And I did have a little bit of student debt. It was a bit of a struggle starting out with all of the other expenses, being a young, working individual. And so when my kids were little, it was something that I talked with my husband about and we decided to figure out what was a good goal amount for each of our kids.”
Kruse said a big attraction was the fact the investment could literally follow her family.
“If we ever move out of state, and we have Florida Prepaid for the kids as well, locking in that in-state tuition we felt was just too good to pass up.”
Because the last thing she wants, added Kruse, is for her kids to graduate from college facing the kind of debt she had.
“You take out student loans, you don’t realize the long-term implications of that. So this is something we can do – my family – for our kids, so we can help alleviate any stress about tuition, about books. People forget about room and board and meal plan costs. And that’s an important part of college when you’re living on campus. You’ve gotta eat!”
Florida Prepaid Spokesperson Shannon Colavecchio said there are other advantages, especially in regards the 529 savings plan.
“We also have made a number of improvements in the past couple of years that have lowered the fees, so it insures that most of your dollars that you’re putting in there to grow are actually going into that growth of investment. And because of some changes in federal tax law, it even allows you to use those funds for K-12 expenses.”
Still, it’s the plan’s extreme flexibility that seems to be its strongest suit.
“It can also be transferred to another child if one person doesn’t use it. An adult parent could even use it for their own master’s degree, as an example, if they choose to get it and it can be used at any institution anywhere.”
As with any investment, though, it’s usually a good idea to check in with an independent expert. Mari Adam is a certified financial planner with the Boca Raton office of Mercer Advisers.
“About half of all parents who are saving for college are doing it in the absolute wrong way. I suppose I could say that more diplomatically, but I won’t. So half of all parents saving for college are doing it in a way that really falls flat. It fails to achieve growth and it’s totally subjected to tax and most of that is because they’re putting it in a savings account.”
Disadvantages that, she said, just aren’t an issue with Florida Prepaid’s 529 college savings plan.
“It’s as cheap as you can get and just blows everybody else out of the water. There’s no reason you wouldn’t use the Florida 529 savings plan now. While 10 years ago, there were many more plans that were more competitive.”
Certainly, as with any major financial decision, it’s always best to consult your own adviser before moving ahead.