Florida Prepaid College Plan??

[cruisnfamily]

Has anyone done the Florida Prepaid Plan for College? We've been waffling on this for years now and have chosen to invest on our own for the kids instead but now I'm thinking about doing the prepaid. I've read every word on the website and I have a complete understanding of how it works and all the what ifs and stuff(I think ).

Anyway, I was looking for some feedback from folks who've done this, and especially those whose kids have reached college age that have used this to pay. Was it as easy and straightforward as it looks? Any pros or cons? Any input would be helpful.

For those of you not in FL, if your state offers a similar plan did you do it? Why or why not?

 

[JimB.]

We've done it for our kids since they were little. The biggest advantage to this (IMHO) is that it is "inflation proof". My kid's tuition will be covered whether tuuition goes up 5% a year or 50% a year.

It depends on your kid's age. The earlier you invest, the better.

It is also transferable to private & out of state schools. Look again real hard.

 

[Boston Tea Party]

Texas had this, but then they stopped offering. I should have signed up.

 

[cruisnfamily]

We've done it for our kids since they were little. The biggest advantage to this (IMHO) is that it is "inflation proof". My kid's tuition will be covered whether tuuition goes up 5% a year or 50% a year.

It depends on your kid's age. The earlier you invest, the better.

It is also transferable to private & out of state schools. Look again real hard.

I really, really like the inflation proof thing. That's the main thing that has me reconsidering. Kids are in 7th and 4th grades. The lump sum payment is about the same for each of them. Guess it would have been less if we did it earlier. I read about the transfers and the what if they don't go to college and the what if they get scholarships....and all that stuff. I feel pretty comfortable with it actually. Just looking for a little more input from those who have already made this jump. It's a pretty good chunk of change after all.

 

[Kermit]

We've researched prepaid plans since we have young children. The financial advisors who I respect most (based on their advice on things I already know how I feel about) uniformly recommend Educational Savings Accounts over prepaid plans, especially if your kids are young. There is more risk, but the stock market isn't as risky as people make it out to be. The stock market has gone up in 100% of 10-year periods and 97% of 5-year periods since its inception. The average growth is about 12% a year, which is more than tuition should increase.

Prepaid does carry less risk, but you do risk losing the extra money you would have gained if good mutual funds do outperform the rate of tuition increases.

Also, can you pay extra in a prepayment agreement for things like textbooks and living expenses? I think those are qualifying expenses with ESA money, and those should only increase at the rate of inflation, which is well below what you'll get from good mutual funds with a good long-term track record.

 

[poohandwendy]

As a parent who is sending her first child to college in the fall, Do everything in your power to have as much money saved for college as you can...as soon as you can. We did have some savings for it, but not quite enough. There will be no Disney or other vacations until at least next year, LOL. I don't think you can be too prepared, financially. (but, it isn't all that bad...but we would have liked to have been more prepared)

If anything, I wish we would have at least made ourselves appear to have more debt than assets. Our DD was eligible for NADA ($0) due to our circumstances. Apparently the govt thinks we are doing really well. Well, isn't that just wonderful!

 

[cruisnfamily]

Kermit-I was going to quote a portion of your post...then I realized I'd need to quote the entire thing. Everything you stated are the exact reasons we have not done this to date. We figured we'd do better on our own which for the most part is true however we just aren't ever going to get a big enough total unless we join a plan like this. We aren't disciplined enough to do it. If we go ahead and buy into the prepaid, then we'll know tuition is covered and our additional mutual funds(which we will continue with) will cover the additional fees(hopefully!).

They do have additional plans for housing and for "local fees" but not for books. We wouldn't do these though, just the tuition plan.

 

[cruisnfamily]

If anything, I wish we would have at least made ourselves appear to have more debt than assets. Our DD was eligible for NADA ($0) due to our circumstances. Apparently the govt thinks we are doing really well. Well, isn't that just wonderful!

You bring up an interesting point here. If we kept the kids money in mutual funds and planned to use it for college expenses, it would be counted as assets on the financial aid forms. BUT, the prepaid plans don't count. It's as if you don't have the money, so they don't count against you for financial aid. I thought that was a huge plus and quite the loophole. I was frankly surprised to read that.

 

[pw2pp]

We went with the Michigan Plan which sounds very similar to the Florida Plan. I too, like that it is "inflation-proof". We only paid $6800 for our oldest and $8000 for our youngest (for 4 years at a University - tution only). We will use the first one in Fall of 2006 when our oldest goes to college.

 

[cruisnfamily]

We only paid $6800 for our oldest and $8000 for our youngest (for 4 years at a University - tution only). We will use the first one in Fall of 2006 when our oldest goes to college.

Wow! How long ago was it? Our price now(same plan as you) would be $10,600approx for each kid. The price is about the same for each kid eventhough one is 3 years younger but if you do the monthly payments, obviously the younger kid has lower payments because you have more years.

 

[pw2pp]

Wow! How long ago was it? Our price now(same plan as you) would be $10,600approx for each kid. The price is about the same for each kid eventhough one is 3 years younger but if you do the monthly payments, obviously the younger kid has lower payments because you have more years.

Bought the first one 17 years ago (when she was a baby)
Bought the second one 15 years ago (when he was a baby)

Michigan offered it at these low prices for 3 years (1988, 1989, 1990) and stopped the program (because, according to experts... they weren't charging enough for it ).
They re-introduced it a few years later with a much higher price tag. We got lucky by buying ours in 1988 and 1990 when the cost was low

 

[floridaminnie]

I signed my daughter up when she was 3 years old and did the 5 year payment plan. I am paying the cost of tuition today. The way tuition has been going up around her lately, I don't see how a mutual fund could keep up with it. I looked at all the ifs too. I did the tuition and the fees portion. I did not do the dorm portion b/c the dorms under the program aren't the best.

 

[cruisnfamily]

I signed my daughter up when she was 3 years old and did the 5 year payment plan. I am paying the cost of tuition today. The way tuition has been going up around her lately, I don't see how a mutual fund could keep up with it. I looked at all the ifs too. I did the tuition and the fees portion. I did not do the dorm portion b/c the dorms under the program aren't the best.

Very valid points as well! Looks like everyone here has really looked into this.

They do limit the dorm availability on the plan which is a big drawback.

If you don't pay in a lump sum, the 5yr payment is definitely the way to go! You save many thousands over the monthly 'til they graduate plan. We'd do the lump sum for my daughter and the 5 year for my son but put down more than 1/2 of it on his, we just don't have the full amount for him but we'll pay it much quicker than 5 years. We'll also continue with our mutual fund contributions for both of them every month which we hope will cover the fees and at least a good chunk of housing.

I'm still hoping they also get the Bright Futures too. A friend of mine who has a kid in college now did the prepaid(tuition only) and then her daughter got the bright futures so she used the prepaid for housing and fees. She said it's barely cost her anything to pay for college, she said it cost more to send her daughter to pre-school than it's costing her for college.

 

[pw2pp]

Wow! How long ago was it? Our price now(same plan as you) would be $10,600approx for each kid. The price is about the same for each kid eventhough one is 3 years younger but if you do the monthly payments, obviously the younger kid has lower payments because you have more years.

Was your price WITHOUT the "dorm plan"?
Ours didn't offer a dorm plan at the time (they may offer it now, I'm not sure?).
How much is tution at a Florida State University right now?
Michigan public universities run approx. $6000 - $8000 (tuition only) per year right now... I'm pretty sure.

 

[pw2pp]

I edited my post to say that the $6000-$8000 cost per year is for TUITION only

 

[cruisnfamily]

Was your price WITHOUT the "dorm plan"?

That's just tuition. 4 years at a university. Which when you think about it works out to $2600approx per year for just tuition at a state university. I believe it's actually for 120 credit hours so $88.33 per credit hour. Just looked at FSU and their fees right now per credit hour are $96.35 so it's a savings...but of course the prepaid people get to hold onto my money for a while and it will grow so I'm not quite sure if it's a savings or a wash in the end. At #96.35 per credit hour an average year would cost $2900.

 

[cruisnfamily]

bump

Hoping to get more feedback.

 

[cruisnfamily]

Thanks for the input!

Just completed the paperwork.....At least the tuition will be covered

 

[chrissyk]

We are absolutely going to do this when we have a child. We're doing tuition, fee plan, and 2 years of dorm (figuring that s/he'll probably want to live off-campus the last 2 years).

This plan is our "insurance plan". We plan to fully fund a Coverdell Savings Account (Education IRA) every year for books/etc. We're also opening an Iowa 529 Plan (through Vanguard) that we will fund to some level every year. Our child will have the option of using the prepaid plan for in-state undergrad and the 529/Coverdell for grad., or using all 3 to go to a more expensive undergrad. I like the idea of making it THEIR choice. BTW, the FL prepaid plan is a great deal compared to what many other states offer!

 

[HomeSweetDisney]

My dad did the Texas Tomorrow Fund for both my sister and I. Says it was the best investment he ever made.