The time is here. Open enrollment for Florida’s Prepaid 529 College Savings Plan has begun!
October 15, 2017 – February 28, 2018
Newborns through students currently in the 11th grade.
That depends. Over the years, the menu of prepaid options has expanded. Different prepaid plans can now be purchased to meet several budgets and/or objectives.
Plans available include a 2-Year Florida College Plan, 1-Year Florida University Plan, The 2+2 Plan (2 years at a Florida College & 2 years at a Florida University), 4-Year College Plan, and 4-Year University Plan.
There is also now a Florida University Dormitory Plan that can be added to offset the cost of dormitory housing.
Generally, each plan (other than the additional dormitory plan) covers fees and tuition for a given number of credit hours at an institution of higher education at some future date. The number of credit hours covered, and the type of institution the coverage directly applies to, varies by plan.
The primary benefit of a Prepaid 529 College Savings Plan is that it provides an opportunity for a benefactor to pay a declared price today to hedge against the effects of inflation and tuition hikes between the present and when a student heads off to college (or university). Essentially, purchasing a plan today removes the inflation, price, and/or investment risk associated with a specified number of credit hours from the benefactor, and places it on the plan sponsor, who will be on the hook for the future cost of the credit hours covered.
For an illustration of how the total cost of tuition and certain fees among select universities in the State of Florida have changed over time, see the chart below.
Data Source: Florida Board of Governors
If the covered child decides not to attend a Florida college or university, there are other options. These options range from a return of payments if the funds go entirely unused, to the application of converted credits to a wide array of institutions of higher education.
The covered credits funded through the Florida Prepaid plan can – depending on the institution – sometimes be converted to an amount of coverage based on a formula incorporating the cost of tuition and fees at the non-covered institution.
These non-covered, convertible credit institutions might include private in-state schools, out of state public schools, as well as vocational schools. Not all institutions are covered, and any institution that is not explicitly covered by the plan today is not guaranteed to be covered in the future. Still, it is nice to know that the plan intends to be flexible.