How to Lock in Tuition at 270 Private Colleges

Katy Hopkins

A new online resource debuted last week to showcase one college savings option for future students and their parents.

On, users can learn about the Private College 529 Plan, a savings vehicle that allows account holders to purchase prepaid tuition certificates to one of 270 (and counting) private colleges, including Brandeis University, Claremont McKenna College, and Wake Forest University.

[Debunk myths about prepaid tuition plans.]

Parents who can bundle away $2,000 now, for example, are effectively purchasing $2,000 worth of today's tuition at one of the participating private colleges, no matter when they claim it. Unlike in state-sponsored prepaid tuition plans, which are guaranteed only if state budgets remain fully funded, the private schools pledge to accept the tuition certificates purchased when tuition was lower.

Opening a Private College 529 Plan does not guarantee admission to any of the participating schools; in fact, colleges do not give special consideration to account holders during the admissions process, says Nancy Farmer, president and chief executive officer of the Tuition Plan Consortium, which oversees the Private College 529 Plan.

But if a student is accepted to one of the participating colleges, the savings a family has already built within the account will be directly applied to college costs, and can be withdrawn tax-free for any qualified educational expenses. An account must be held for at least 36 months before it can be put to use, and the prepaid tuition units are applicable for 30 years.

Prepaid college tuition plans are not the only 529 account option families have. College savings 529s, generally regarded as safer options, allow families to gradually shift from risky to safe investments as their children age.

[Learn more about age-based 529 plans.]

But the Private College 529 Plan "is also protecting you from market volatility," Farmer notes. "If something happens with the financial markets, what you've prepaid is guaranteed."

For students who choose to attend schools that don't participate, money can be rolled into other state-sponsored 529 accounts, Farmer notes, but families may not get the full benefit of their savings unless they stick to participating schools. With that caveat, parents may unintentionally whittle down their child's options, perhaps years in advance.

"You might have to tell your child, you can go to MIT but not Harvard, because the plan will pay different amounts for these schools," says Robert Weinerman, senior director for college finance at College Coach, an educational advising company. (Harvard University does not participate in the plan, but the Massachusetts Institute of Technology does.)

The Private College 529 Plan is not the right savings vehicle for every family, Farmer notes, but the new website wasn't created for the sole purpose of registering new account holders. There are also resources to guide future college attendees and their parents through the costs maze, with sections including the importance of using net price calculators, how to save for college, and other college savings plans.

[Estimate your total cost of college.]

"At the end of the day, if a family comes to our website and says, 'That's just not right for me,' but then they go open their state-sponsored savings plan, that's still a win," Farmer says. "That's a win for colleges, and that's a win for the country."