Do a 529 “cash” plan with a mutual fund company.
NEVER do a prepaid tuition plan, ever!
Unfortunately, most of the parents that invested in the PACT, whose kids will start in the next four years, are about to learn that lesson the hard way.
Problem with a 529 is that you get a 2% return with a 8% tuition growth rate. If you had put away enough money in the moderately conservative plan to pay four years of tuition in 2000, it would only be able to pay about 2.5 years today.
The folks who purchased the Alabama plan when it still said “guaranteed” will win in court.
The plan was horribly mismanaged (they paid big bucks for that management).
Something to think about is that, if professional money managers can’t keep up with tuition increases, what are regular folks supposed to do? Between the incredibly powerful financial aid officers with a social agenda and the lack of concern for middle class students ability to pay unless you are able to hit a freethrow or catch a pass, your opportunities to go to college are closing.
Think pretty soon these institutions who strongly desire to equalize society will get to control student loans, one of the last ways available for middle class families to send their children to college.