Mt. Holyoke is participating in a prepaid college tuition plan tailored specifically for private colleges, according to the College's Web site. "[Mt. Holyoke is] responding to a national call to make higher education more affordable and more accessible to students," according to the site.
The program's official name is the Independent 529 Plan. "We see this new plan as part of our ongoing effort to make higher education accessible to more families," Mary Jo Maydew, vice president for finance and administration at Mt. Holyoke, said on the site. "Independent 529 Plan allows contributors to lock in tomorrow's tuition at less than today's price."
Section 529 plans allow families to invest money and earnings on the accounts that do not generate any federal income tax, as long as the money is used to pay for higher education. However, the law, which allows qualified withdrawals, is scheduled to expire on Dec. 31, 2010, according to the site.
Interestingly, 529 plans can be transferred to other members of the family and the money can be refunded if the student receives a scholarship which covers the cost or chooses to attend a non-member school.
The success of the plan is not dependent on the stock or bond market, which is good news for purchasers. According to the Web site, money added to the 529 plans is like "prepurchasing tuition" for the future at today's price.
"Regardless of whether a student attends Mount Holyoke or another one of the member colleges, Independent 529 Plan represents a way for parents to contribute to, and pay for, private college without worrying about either investment risk or tuition inflation," Maydew said in a Mt. Holyoke press release. The 529 plans can be used at any college or university participating in the program. Other schools which are members of the 529 plan include Stanford University, MIT and Princeton University.
The plans are useful because they can be used at schools all over the country. "Think of it as buying a shopping certificate for use at any of the stores at a mall," said Doug Brown, president and CEO of Tuition Plan Consortium, the nonprofit group that oversees the plan, on the Consortium's site. "Students don't choose their college at the time of purchase, but years later, after they have applied and been accepted in the regular manner."