---
title: Should You Gamble on a Prepaid College Tuition Plan?
description: Some states offer ways to pay now for college credits later. But there can be big drawbacks.
authors:
  - name: Ian Salisbury
    role: Senior Editor
    url: https://money.com/author/ian-salisbury-2/
    bio: Ian Salisbury was a senior editor at Money, focusing on investing, banks and mortgage.
    at_money_since: 2013
    articles: 91
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published: '2016-02-01T15:09:20.000Z'
modified: '2024-05-16T10:52:06.000Z'
section: Education
tags:
  - 529 plans
  - College
word_count: 212
canonical: https://money.com/college-prepaid-529-plan/
type: Article
source: structured-blocks
---

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![paid stamp](https://img.money.com/2016/01/160129_coll_prepaidtuition.jpg?crop=0px%2C150px%2C2100px%2C1181px&quality=85)

Pay tomorrow's tuition at today's prices? That sounds like a great deal—and it might be, but only under certain circumstances. Here's what you need to understand about prepaid 529 plans.

**HOW THEY WORK:** In about a dozen states you can essentially buy educational credits now, at current prices or with an added premium, for future use at in-state institutions. There's also one plan, at [privatecollege529.com](http://privatecollege529.com), that lets you prepay for about 300 private schools.

**THE CAVEATS:** You usually can invest only in your own state, says Joe Hurley, founder of [Savingforcollege.com](http://Savingforcollege.com), which keeps a database of the plans' financial details. And while there are bailout options if your child wants to study elsewhere, you may get back only your own investment plus inflation.

[![Best college education image](https://content.money.com/wp-content/themes/money2018/img/college-site-banner-02.png)](https://best-colleges.time.com/money/search-colleges/?xid=cm-mcpFindTheCollegeWidget)

**BEST FOR:** Parents who are pretty confident that their kids will end up at State U should do fine. Florida and Maryland residents also get generous cashouts if your kid heads elsewhere, letting you walk away with about what you would have spent on in-state tuition.

**WHEN TO SKIP:** For most out-of-staters, of course, prepaid plans are a nonstarter. And if you think your child is going to be aiming for Yale rather than the local public university, steer clear. A traditional 529 is a safer investment bet.

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