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Financial Planning / Paying For College


Subject:  Re: Paying for College and Aid Date:  2/25/2013  11:07 AM
Author:  spinning Number:  8024 of 8478

Some comments on 529s, separate from the original question.

Should i put this money in a short term investment account or park it in a 529 for each of them locking in current tuition?

I vote neither. This is money you will have borrowed and that you cannot afford to lose as the need is very short-term. I would be keeping it in CDs or even money market funds. Even with the low interest rates of those accounts, it would still guarantee that you have the principal available when you need it.

Some state 529s have FDIC insured options. And some have state income tax advantages with no minimum holding periods. This means that even when the kid is in college, for some states you can get FDIC insurance and a guaranteed gain of whatever the state income tax benefit is. You could put money in today, take it out tomorrow to pay for college and get a nice benefit.
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