By Harold Simansky
Educational Investment Advisor

529 Prepaid Plans offer a different option in saving for college. Not to be confused with 529 Savings Plans, the prepaids allow you to lock in future tuition costs at today's prices. You make the full payment now or pay over time. Then, when your child is ready for college, no matter how high tuition has risen in the meantime - the program takes care of it at any participating school.

While such pre-paid plans are ubiquitous among public colleges and universities, until recently, very few private schools offered a prepaid plan. But this changed with the emergence of the Independent 529 Plan ( www.independent529plan.org ), which is specifically for private colleges and universities. As with the state-sponsored 529 Prepaid Plans, participants can purchase tuition certificates at current prices – even with a small discount – and then use these certificates at any private college taking part in the program. Currently about 250 private colleges and universities participate in the Independent 529 Plan.

This is considered a tax-advantaged plan because you have made an investment worth a certain amount, have seen that investment increase in value; and yet you haven't had to pay any taxes on this increase in value.

A Look at the Disadvantages

Prepaid plans offer some advantages, including low-risk, guaranteed returns on your investment. But they also come with a catalog of disadvantages, chief among them i...

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