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College Savings

Word of the Day Wednesday: Prepaid Tuition Plan

Each Wednesday, MEFA will feature a Word of the Day, in which we’ll highlight a word (or sometimes a phrase) related to the college planning process. This month, we’re focusing on vocabulary related to saving for college.

Today's Word of the Day is Prepaid Tuition Plan.

A Prepaid Tuition Plan is an education savings plan that allows families to pay future tuition costs for a designated beneficiary at today’s prices. Families participate by either investing one annual payment or monthly contributions. Based on the amount a family contributes, Prepaid Tuition Plans cover all or a portion of the increase in tuition prices from when the family invests to when the beneficiary attends college.

Every Prepaid Tuition Plan has a list of eligible colleges and universities. Some plans only include schools within the plan’s home state, while other plans extend to select out-of-state colleges and universities.

Why does this matter to you?

If you decide to participate in a Prepaid Tuition Plan, you’ll be saving on the future cost of tuition by locking in the current tuition charge at participating colleges and universities. Your savings benefits you two-fold: one, by lowering the price you’ll pay for tuition, and two, by guaranteeing that you’ll have funds laid aside for college costs once they come due.

The Massachusetts Prepaid Tuition Plan is called the U.Plan, and it locks in tuition and mandatory fees at 80 colleges and universities, both public and private, in Massachusetts. The enrollment period begins annually in early May, but you can prepare now by setting aside funds in a savings or checking account in anticipation of your contribution next spring.

For more information about the U.Plan, and to download an informational brochure, visit the U.Plan website.


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