Money: A New Way to Pay for Private-College Tuition

Parents battling skyrocketing college costs get an extra weapon this week as the first prepaid tuition plan designed for private colleges and universities makes its debut. Like the prepaid plans many states run for residents, the Independent 529 Plan is a tax-advantaged way to lock in tuition at today’s rates, thus hedging against cost increases like last year’s 6% average jump. The plan sells discounted tuition credits good at more than 220 private schools, from Amherst to Princeton. Contributing $10,000, for example, buys a full year at a like-priced college or half a year at one charging $20,000. You can specify a school after your child is admitted. If Junior doesn’t pick a listed school, you get your money back, adjusted slightly for investment performance. The downside: you must commit to the plan for three years, and there isn’t the same potential investment growth as with more aggressive 529 college-savings plans or Coverdell accounts. Get more info at www.tuitionplan.org –By Barbara Kiviat