I spoke with a happy parent the other day who is preparing to send her high school grad off to college. The good news? Her daughter got into a top-notch private college. The bad news? The bill – even after a sizable scholarship grant – is hefty.
Thank goodness that the student’s parents are well prepared. They’ve been saving up for years, and did so in two very smart ways. They opened accounts for their daughter with both the Florida Prepaid College Plan and a College Savings 529 plan. Both accounts can be used to pay their daughter’s tuition and other college expenses.
The Florida Prepaid, if you’re not familiar with it, helps Florida families eliminate the stress and uncertainty of paying for college by locking in tomorrow’s college costs today. College savings 529 plans, which are sponsored by almost every state and the District of Columbia, offer unbeatable tax-saving opportunities by letting families put money aside for college and watch their savings grow tax-free. Both types of plans can do the most to maximize your college savings.
In this situation, the parents called us with questions about how to make the two plans work best together. They want to draw funds first from their College 529 plan, and hold off on using the Florida Prepaid benefits as long as possible (the Prepaid benefits will grow each year to keep up with rising Florida state tuition). Their goal is to save the Florida Prepaid benefits until last in the event their daughter wants to continue on to grad school.
The parents asked us whether they can indeed use their daughter’s Florida Prepaid College Plan benefits to pay for grad school. We double-checked with the experts at the Florida Prepaid College Plan and the answer is a resounding “yes.”
Prepaid funds, up to the entire value of the plan purchased, can be used at vocational schools or graduate schools, both private and public, in-state or out-of-state, as long as the school is an eligible educational institution.
The student has 10 years from their projected college enrollment date (generally, the year they are expected to graduate high school) to use their plan benefits. For most students, that will be roughly until age 28. Any benefits not used for undergraduate education can be applied toward graduate-level courses within the same 10-year period. You may also transfer the benefits to another qualified family member or request a refund, according to Florida Prepaid representatives. And of course, the Florida Prepaid Plan will pay the same amount to other schools as they would have paid to a Florida state school.