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What Is Prepaid Tuition?

January 20th, 2008

In our age of highly expensive education, it is no wonder that several methods of planning out education are coming out into the open. Prepaid Tuition is one such plan, which is better known as the Qualified Tuition Programs or the 529 investment plans. The principle of the investment is simple. A parent of someone else makes a investment for the child for future college education. This money grows tax-deferred and can later on be used to pay out for the college education of the child when he/she comes of age. Since the amount is invested before to pay for college tuition, it is known as a prepaid tuition plan. If, after adjusting the inflation and actual costs of the course, the amount invested earlier falls short, then the student has to make only a payment for the excess amount.

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