Funding Of Education
And just like 529 college savings plans, prepaid tuition plans have very high contribution limits. These limits are determined at the state level, and are generally based on the student’s expected future college costs. Contributions are also considered gifts for tax purposes, so deposits up to $15,000 per year per individual will qualify for the annual exclusion . What’s more, if you elect to treat your gift as if it were made over a five-year period, as much as $75,000 will qualify.
Participants purchase tuition credits or certificates that entitle the account’s beneficiary to a waiver of tuition costs at qualifying colleges when the student (i.e., the beneficiary) enrolls in school at some future date. Although the price paid today is not necessarily equivalent to current tuition costs, prepaid plans use current tuition levels to establish their pricing. 529 college savings plans can be withdrawn tax-free to pay for qualified higher education expenses, which include tuition, fees, supplies and equipment, computers, internet access and even some room and board. Prepaid plans, on the other hand, usually only cover the costs of tuition and fees. Personal financial advisors who offer college-planning services work primarily with parents or guardians interested in establishing and growing savings accounts with funds specifically allocated to cover the cost of their children’s college education.
State Schools Vs Private Universities
However, the Federal Trade Commission works to prevent fraudulent, deceptive and unfair business practices including those in the field of education and alerts United States' consumers about diploma mills by delineating some tell-tale signs in its official web page. Under the terms of the Higher Education Act of 1965, as amended, the U.S. "Degree replacement services" provide exact reproductions of Ph.D. or M.D. diplomas from any university in the U.S. to anyone who will write a check - no questions asked5.