Part I of a Two Part Series on 529 Prepaid Plans
By Sheila Salehian
Senior Deputy Treasurer for the State of Nevada
November 7, 2013
I often get asked this question when providing community outreach support. Like most Deputy Treasurers who serve the public by helping families save for college, that question is a difficult and somewhat tricky one to answer. Since most of us are not a certified professional financial planner, we can only share our experiences and the facts of what a prepaid tuition program offers. In addition to sharing facts from Bloomberg and other financial experts, which I’ll discuss in Part II of this posting, my typical response is to share my very real and personal story.
When my children were born in 1999 and 2001, like most working mothers, I found myself overwhelmed with the demands of being a new mother, juggling a corporate career, and finding the right “work/life” balance. Not to mention that every raise I received seemed to be quickly engulfed by the cost of diapers, daycare, kid’s clothes, or never ending extracurricular kid activities. Although my husband and I talked about the need to put money away for our children’s future college costs, starting the accounts took a back seat to 401K deposits, buying new cars to carry all the kid cargo, upgrading to a bigger house, and making sure we took that much deserved vacation twice yearly. At that time, a Nevada Prepaid Tuition contract was selling for about $7,500 for a 4-Year university 120 credit program.
Fast forward 10 years; the guilt and worry about their college education has set in. The kids are doing their part, having finished grade school with flying colors and into middle school with high academic achievements, thus far. Intrinsically motivated to get straight “A’s, a bit perplexing and encouraging all at the same time. As parents, you find yourselves thinking, “Where did the time go?” That thought was quickly followed by, “Well, hopefully they will both get full ride scholarships with their grades, drive, and ambition. Then we started looking into the reality of that hope and decided to revisit that same 4 -Year University Prepaid contract plan option we had looked at years ago. That same plan would now cost almost $23,000 for each child. Can you say “$30,000 mistake?” Needless to say, hindsight is always 20/20!
To help ease the guilt and worry about funding the future education of your children, in my next post, I share some key lessons I’ve learned in considering and investing in a Prepaid Tuition contract. Until then, you can check out a great comparative tool here.
About the Author
Sheila Salehian is a Senior Deputy Treasurer for the State of Nevada, which offers a 529 prepaid tuition program and 4 other direct sold and advisor sold 529 college savings plans. Sheila is the Secretary of the College Savings Board of Nevada and oversees the Nevada Prepaid Tuition program among other duties. Prior to joining the Treasurer’s Office, Sheila was an executive for a Fortune 100 Financial Services organization providing expertise and support for a wide array of financial products and services.