Private College 529 College Savings Plan
The Private College 529 plan offers a tax-advantage way for families to save for a private college education.
“The plan represents a move by private colleges to make quality education more affordable,” says Wendy B. Libby, vice chair of the board of directors of the Consortium, a national group of independent colleges and universities. “There are many ways to save for college, but Private College 529 is more than a savings or prepaid plan. It’s the only plan of its kind that protects against future tuition increases and stock market volatility, is portable across state boundaries, and is tax-exempt if used for education.”
This is how the plan works: Obtain an enrollment kit by calling (888) 718-7878 or by visiting www.privatecollege529plan.org. Then purchase a certificate that guarantees a certain percentage of tuition, which varies depending on each participating institution’s current tuition and certificate discount rate set by that college for the year the certificate was purchased. (A certificate purchased for $10,000 might guarantee a year’s worth of tuition at College A or one-half year’s tuition at College B.) The website provides a tool to calculate the tuition benefit at different member colleges. Students choose their college after they have applied and been accepted through the standard admission process.
Certificates are held for three years minimum before redemption. After one year, they may be refunded or rolled over into another 529 plan; withdrawals used for enrollment at non-member colleges, including publics, are not subject to federal income tax. There are no fees of any kind to the consumer. Certificates are transferable to other family members, including first cousins and in-laws. Colleges retain control over their own tuition and fees.
The plan is the first 529 plan, so named for the IRS code that defines them, to be sponsored by colleges rather than by the states. Administered by Oppenheimer Private Investments Inc. (OFIPI), the Private College 529 plan covers only tuition and fees; however, the Consortium hopes to extend the plan to include room and board as well as graduate study.