Do I have to be a Massachusetts resident to use the U.Plan Prepaid Tuition Program?
No. Both residents and non-residents of Massachusetts may use the U.Plan.
What costs do U.Plan Prepaid Tuition Certificates cover?
Tuition Certificates will cover undergraduate tuition and mandatory fees as charged by participating colleges and universities at enrollment. Tuition Certificates will not cover the cost of room and board, books, supplies or graduate education.
How often can I contribute to the U.Plan Prepaid Tuition Program?
You may contribute to the U.Plan Prepaid Tuition Plan once a year, during our annual enrollment period (typically from May 1st to June 30th). You may keep contributing through your child’s sophomore year (10th grade) of high school.
What are the minimum contribution amounts?
The minimum contribution amount is $300 for one certificate per maturity year.
How is the U.Plan Prepaid Tuition Program considered when applying for financial aid?
The U.Plan is treated as an asset of the account owner. If the owner is a parent, 5.6% is factored into the federal financial aid formula.
Do I have to choose a college now to begin saving?
No. You won’t be asked to select a college or university until your child is admitted to a participating college and you wish to apply your Tuition Certificates to pay for tuition.
Is my child guaranteed admission to a participating college?
No. Participation in the U.Plan Prepaid Tuition Program has no bearing on the admissions process. There is no preferential treatment for students participating in the U.Plan.
What happens if my child does not attend a participating college or decides not to attend college at all?
You may withdraw your money at maturity. You will receive your initial investment plus interest compounded annually at the rate of Consumer Price Index (CPI).
What happens if my child enters college early or defers enrollment?
It may be possible to use your Tuition Certificates up to two years prior to the scheduled maturity, but MEFA cannot guarantee that the funds will be available to meet such early redemption requests.
If your child defers enrollment, you may defer use of Tuition Certificate proceeds for up to six years. However, the value of the tuition percentage guarantee is calculated as of the year of maturity. The student is responsible for any increase in tuition costs from the year of maturity.
What happens if new colleges and universities join the program or participating ones withdraw from it?
If a college joins the program at a later date, it must honor Tuition Certificates purchased since the program started in 1995. If a school drops out of the program, it must honor all Tuition Certificates purchased prior to the year it withdrew from the program.
What happens if I need access to my funds prior to maturity?
Tuition Certificates are not a liquid security, and you should not expect to be able to redeem them before maturity. It is possible that MEFA may be able to accommodate a limited number of requests by attempting to find a new buyer for the Tuition Certificates. However, MEFA can provide no assurance that such attempts will be successful. If you think it’s likely that you’ll need to withdraw college savings funds prior to their scheduled maturity, you should consider other savings programs (including the U.Fund College Investing Plan) that have more flexible withdrawal provisions.
Are Tuition Certificates transferable?
While Tuition Certificates must be designated by the owner for use by a specific child, they may be transferred within the owner’s family. You may request a change of ownership or beneficiary by downloading the Beneficiary Change form.
Is the U.Plan Prepaid Tuition Program a safe investment?
Although there is no such thing as an absolutely safe investment, the U.Plan is one of the safest college savings investments available. Tuition Certificates represent interests in Commonwealth of Massachusetts general obligation bonds, and therefore are backed by the full faith and credit and taxing power of the Commonwealth of Massachusetts. Unlike stock or mutual fund investments, the value of your investment at maturity is a known quantity. Participating Institutions have agreed to accept the payments made by the Commonwealth for a specific percentage of tuition and mandatory fees in the academic year that begins when the Tuition Certificate matures. If you do not use the Tuition Certificate, the value of your investment at maturity - the principal amount you invest, plus interest at CPI compounded annually until the maturity date - is also known and not subject to stock market fluctuations.
What are the tax advantages of saving with the U.Plan Prepaid Tuition Program?
The Tuition Certificates are exempt from Massachusetts income tax. In addition, it is MEFA’s bond counsel’s opinion that the interest on and benefits received from the Tuition Certificates are exempt from federal income taxes, although there is some uncertainty as to whether they are entirely tax-exempt since the program is the first to rely on CPI-indexed general obligation bonds and the IRS has not made a tax ruling on the U.Plan Prepaid Tuition Program. State tax treatment may differ for residents of other states. Please refer to the Tax Matters section of the Program Description and Offering Statement for further details, and see your tax advisor.
Are the Tuition Certificates subject to gift tax?
Under the current law, the use of the Tuition Certificates to make payments at a participating school will not subject the owner to federal gift tax. However, other transactions involving Tuition Certificates may have gift tax consequences. Please refer to the Tax Matters section of the Program Description and Offering Statement for further details.
