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More parents pre-pay kids' college tutition

POSTED: Tuesday, December 9, 2008 - 2:38pm

UPDATED: Wednesday, March 17, 2010 - 12:00pm

UNDATED — As tuition costs continue to rise, more parents are using a 529 plan to pre-pay for their kids' college.

The plan locks-in current tuition rates for most in-state public schools.

In September, Texas launched the tuition promise fund. It's a pre-paid plan managed by a third-party investor.

Officials expect more state universities will raise next year's enrollment prices. Schools point to state budget shortfalls, sagging endowments and a drop in charitable giving.

A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1998.

For more information on the plan, and the specifics for each state go to www.savingforcollege.com.

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