529 Savings Plan vs. Florida Prepaid
So, you want to save for college but you’re not sure where to build your stack. You can choose between the 529 savings plan or the Florida Prepaid Plan, but which one is better? Is there even a difference? Check out this guide created by your trusty advisors over at College Funding of Tampa Bay to find out which program is best for you.
Florida Prepaid Plan
The security of the Florida Prepaid Plan is a fantastic option for prospective Florida students looking to attend a higher education in-state. With many benefits and minimal drawbacks, this option is a no-brainer for many.
Pros of the Florida Prepaid Plan
A Definitive Cost
When you meet with an advisor, many factors are used to calculate a precise monthly payment designed to be the most effective but affordable option for you. There are no fees and the cost will never change.
Locked-In Tuition Cost
No matter when you sign up for the Florida Prepaid Plan, your cost of tuition will remain the same as the predicted cost regardless of whether the final price is higher or lower at the time of enrollment. If the tuition ends up being higher, Florida Prepaid will pay the difference. If the tuition cost is lower, you will be reimbursed the amount you went over.
Cons of the Florida Prepaid Plan
Limited to Tuition Cost
Your Florida Prepaid Plan can only be used for tuition costs, but the Florida Savings Plan can be used for other expenses like books, supplies, etc. and it’s run by the same financial group to keep everything tightly knit.
In Favor of Florida Schools
As the name suggests, the Florida Prepaid Plan is mostly beneficial to schools based in the state. You can attend a school outside of Florida, but your choices are limited to a list of eligible institutions. This isn’t a problem if you stay in Florida through the duration of your college days, and even still the list of qualified out-of-state schools is pretty vast.
529 Savings Plan
The 529 savings plan is available to anyone looking to stash away extra funds for safekeeping to use for higher education later down the line. It’s a popular option for many, but how does it fare against the Florida Prepaid Plan?
Pros of the 529 Savings Plan
Use For Any Expense
Any amount that you put into your 529 can be used for any of your school needs. This includes not only tuition costs, but other necessities like books, boarding, meals, and various supplies.
Pay at Your Own Pace
Rather than being tied to a required monthly payment,you can contribute to your 529 as you see fit. Pitch in any amount at any frequency no matter how inconsistent. This flexibility is beneficial to those who don’t have a set or consistent income but still want to set aside their extra money for school.
Accepted Throughout the Country
The 529 isn’t limited to just Florida. You can bring this savings account with you wherever you go with no fees or consequences. This is especially helpful for students who aren’t sure about where they plan on attending yet but want to start saving as soon as they can.
Cons of the 529 Savings Plan
Comes at a Cost
Unlike the Florida Prepaid Plan, this option comes with various fees that can pile up the longer you use it. Since the goal is to save money, paying fees seem a little contradictory.
Fund Amount Not Guaranteed
Since you’re not locked into a set plan, your investment can fluctuate. Sometimes, this can happen for the worst since the amount you put in can drop in value by the time you need it. In a way, it’s almost like a gamble.
You’re Responsible for Payments
The flexibility of not being obligated to a monthly payment can be considered a benefit to some, but it can also be a detriment to others. A monthly plan ensures that you stick to your responsibility of funding your savings account, but it can be hard to find the motivation to make deposits on your own.
Zero Coverage
Since you are responsible for the amount and frequency of your deposits, there’s no one to help you cover any differences when it comes time to apply for college. If you come up short on tuition, then you need to find a way to come up with the deficit on your own.
Bottom Line
When it comes down to it, which program do you pick? The 529 savings plan gives you greater flexibility in how and where you spend your money, but the Florida Prepaid Plan is a better deal as long as you stay in Florida or attend a qualifying school.
If you still need some direction on what you should do or need help getting started, call College Funding of Tampa Bay at 813-850-0241 for a free consultation!
