Course: Fundamentals of Financial Planning
Lesson 6: Educational Savings Techniques

Student Question:

Good afternoon –

What happens if a parent has contributed to a prepaid tuition plan, but the child decides not to attend that school? Also, do contributions pertain to just one school? Or is it any school within that state?

Kind regards,

Austin


Instructor Response:

Hi Austin,

Good to hear from you.  It’s going to depend on the plan and the school.  There is no overriding rule for all of them.  Sometimes you’ll have to just take a refund, but sometimes the value can be transferred to another in-state and sometimes out-of-state or private school.  So, one would want to do careful research on the specific prepaid plan they are using to be sure of the details. Definitely one of the drawbacks of the prepaid plan.

Dan