A New Method to Save for Pricey College Tuition
NEW YORK -- You now have another way to pay for Junior's Ivy League education.</br></br>A new type of prepaid-tuition plan, known as an Independent 529 Plan, will allow parents to pay for future tuition at private colleges at discounted rates. It is similar to existing state prepaid tuition plans, but, in this case, families don't have to pay penalties if they choose schools outside their states.</br></br>"You're simultaneously purchasing an interest in all of the colleges in the program," said Timothy Lane, vice president of tuition financing at TIAA-CREF, the pension-fund firm that manages the investments for the program.</br></br>A group of nearly 300 universities including Ivy League schools and regional institutions is expected to participate in the Independent 529 Plan. The plan was approved by the Securities and Exchange Commission earlier this month and is expected to be launched July 1.</br></br>Participants can buy a "piece" of a private college's tuition at current rates that can be redeemed as payment at any one of the schools that participate in the program. The amount of tuition that participants can prepay will depend on the school: the higher the school's tuition, the lower the percentage the money buys.