Which is better: prepaid college or 529 plan?

Question

Which one did you/ would you choose and why?
My baby is only five months old, but I know that college tuition is probably going to be really high in 18 years.

Answer 1

If you can force the kid to the college of your choice...Pre-paid.

You're paying today's rates for tomorrow's services...College costs in the past 20 years has really outpaced inflation and probably the standard returns on most investments...
(Yeah I know, real estate the past few years has been amazing)

Again the past is no predictor of the future...

Answer 2

I don't know about all states, but Illinois offers two different 529 plans. One is a standard 529 plan and the other is a prepaid tuition plan that you can use to attend any college with. There are some details where they will give you the value for an Illinois school for you to apply at a school out of state, for instance. So, depending....you could be partially short.

I looked into it and at my state, you can have an account open for your child for both. You do receive the tax benefits in either or both cases that a 529 plan provides. They way I see using both working is that you use the prepaid tuition plan to pay for the tuition and use the standard 529 to pay for books and room and board.

Good luck.

Answer 3

Doesn't prepaid only work if you know for sure which college?

I applaud you for thinking early about college costs rather than later. But start saving in a 529.