4 Clients Who Can Benefit from Private College 529 Plan

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Marc Suhr

By Marc Suhr

May 3, 2024

As an experienced financial advisor, you are probably already well-versed in the unique tax and estate planning benefits offered by 529 plans as a savings vehicle, but have you considered how Private College 529 Plan could fit into your clients’ college savings portfolios and offer an added level of diversification and protection to their strategies?

Private College 529 is a unique prepaid 529 plan that allows clients to lock in current tuition rates through the purchase of Tuition Certificates, redeemable at any of nearly 300 participating private colleges and universities, ranging from smaller institutions like Albright College to more well-known universities like Stanford and the University of Miami. Rather than investing in market instruments, the growth of assets invested in the plan will depend on tuition and fee increases at the member colleges, all of which guarantee to honor prepaid tuition no matter how much costs increase. 

Accounts can be opened with as little as $25, though larger contributions will naturally be required to cover tuition and fees fully. Clients enjoy the same tax benefits as all 529 plans, like tax-free growth and tax-free withdrawals when used on qualified expenses.

Here are four client profiles that could benefit from opening an account with Private College 529.

Clients with a large lump sum to invest

529 plans offer generous gifting and estate planning benefits for clients who want to contribute a large lump sum at one time. By making that contribution to a Private College 529 account, a parent or grandparent can enjoy those benefits while also guaranteeing an education for their beneficiary, all without taking on market risk. 

Clients with beneficiaries closer to college

Students who approach college will start to have a clearer picture of the institutions that they are considering, potentially making Private College 529 an attractive option. If a family is just starting to save as the student enters high school, you will likely recommend conservative investment options with a limited return. Private College 529 may be a better choice to protect against tuition inflation, which can exceed returns offered by short-term securities. It is also possible to roll over an existing 529 plan to Private College 529, but be sure to do so in a timely manner, as tuition certificates must be held for 36 months before redemption.

Clients with a private college affinity

If your clients attended private colleges, it is possible that they want their children to go to their alma mater or similar private schools. If this is the case, Private College 529 provides an opportunity to save specifically for this goal and set this expectation for the student. With so many participating schools and coverage nationwide, this client might find Private College 529 an ideal option.

Clients who are risk-averse

Building a financial plan for risk-averse clients that gets them to their life goals is a challenge, but with Private College 529, you have a great opportunity to ensure their future education goals are met. For clients who prefer certainty and do not want their educational plan to depend on equity and fixed income markets, Private College 529 is a great choice.

Because Private College 529 locks in tuition rates for your clients, it can be added to an existing college savings portfolio to complement a traditional 529 college savings plan. Your clients can use the traditional 529 plan to pay for room and board, books, computers and other expenses their child will incur for their education.

If you have clients who fit these profiles, encourage them to get started as soon as possible, as tuition rates are subject to increase on July 1.