Are prepaid tuition plans and college savings plans different?
Yes. With a prepaid tuition plan, parents, grandparents, and others essentially “lock in” today’s tuition rates, and the program will pay out future college tuition at any of the state’s eligible colleges or universities (or a payment to private and out-of-state institutions). A college savings plan is an investment program that allows participants to invest in a special account designated for qualified higher education expenses. In general, college savings plans offer a rate of return that depends on the performance of the plan’s investments. As such, the value of a college savings plan account may increase or decrease over time.
