Should You Open a U.Plan or U.Fund?
Beginning the journey of saving for college can bring up a lot of questions. One of the most common questions we get from families just starting the process is if they should save in the U.Plan Prepaid Tuition Program or the U.Fund College Investing Plan. Both plans have valuable benefits, so families can't go wrong saving in either one. But since the two programs have different advantages, a good option for many families is to open an account in both! I sat down with Julie Shields-Rutyna, the Director of College Planning here at MEFA, to discuss why she opened both a U.Fund and a U.Plan for her daughter Alison.
LP: What made you decide to save in both the U.Plan and the U.Fund?
JSR: Both plans have their benefits, and I wanted Alison to have options. If she decides to go to school in Massachusetts, then the idea of locking in the tuition while she was young and beating out inflation costs was appealing. It's a safe program. I still get my money back with interest if she decides to go elsewhere, with no penalty. It's a good option no matter where she goes, and an excellent option if she chooses to attend a U.Plan school.
I still wanted to open a U.Fund because of the flexibility it allows. It can be used for school anywhere, not just in Massachusetts. I also liked that it can be used for costs that were not covered in the U.Plan, such as books, supplies, and room and board. It can even be used for graduate school.
If parents had a crystal ball, it would be easy. But we don't. So you have to make decisions based on possibilities. We live here in Massachusetts and there are so many great schools here. I figured there was a high chance she could end up choosing one of them.
LP: When did you start saving? Did you open an account in both plans at the same time?
JSR: I did open both accounts at the same time, when Alison was in 6th grade. I wish I had started earlier, but I have been amazed at how much I've been able to save, even starting when I did. It surprisingly adds up. As she gets closer to graduation, the stress about paying for college gets stronger. So I've tried to increase my contributions each year.
LP: As Alison got older and started to develop her personality more, did that impact which plan you saved in? For example, with a child more likely to live at home and attend a Massachusetts school, you might lean towards the U.Plan, while with a child more likely to attend a school out of state, you might lean towards the U.Fund?
JSR: As your child's personality develops, you may be led to make certain choices. With Alison, even as she gets older, that decision still hasn't really become clear. Alison will be a senior in the fall, and right now she thinks she wants to stay in the Northeast. So there's a high chance it could be a Massachusetts school. But there's also a chance she could end up somewhere else in New England or even as far away as D.C. So I'm glad that I saved in both plans.
LP: What advice would you give to families deciding which account to open?
JSR: The big thing I hear when I talk to families is that they are very concerned with doing the right thing. They want to know exactly what account to open and exactly how much money to contribute. But more important than any of that is just to start something. Even if it's just a small amount! And to start as early as possible. The habit kicks in and it becomes easy to continue a monthly or yearly contribution. After you've started saving, then you can work on fine tuning it over time or adjusting the deposit amount. I'd recommend that families review their plan every year. But again, the most important thing is just to start.
Visit the U.Fund and U.Plan pages to learn more about how to start saving in each plan.
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