Prepaid College Tuition Plans - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group

False Security of Prepaid College Tuition Plans www.skloff.com

Wall Street Journal – The False Security of Prepaying Tuition - 02/20/10 “Across the nation, college prepaid plans are operating in the red, putting their promises to investors …in jeopardy.” “For now, the states still are paying tuition as they agreed. But the fine print in some state contracts gives them some wiggle room to pay out less than the promised amounts.” “After Florida passed a law in 2007 that allowed the state's research universities to charge a "differential" tuition on top of state's base tuition, prices more than quadrupled for one of its plans aimed at covering that difference.” www.skloff.com

Prepaid College Tuition Plans Have Different Levels of Guarantees Full Faith and Credit States Promise to Cover Any Shortfalls if the Funds Cannot Meet its Obligations www.skloff.com

Prepaid College Tuition Plans Have Different Levels of Guarantees Legislative Appropriation States Legislatures are Required to Consider an Appropriation to Cover Shortfalls www.skloff.com

Prepaid College Tuition Plans Have Different Levels of Guarantees Fund Assets Some Plans are Backed Solely by the Assets in the Plan www.skloff.com

Wall Street Journal – The False Security of Prepaying Tuition - 02/20/10 “Some plans rely on schools to make up shortfalls or use other reserves, such as unclaimed property funds. Independent 529 Plan, Kentucky, Massachusetts, Texas, Tuition Promise Fund, West Virginia” “In South Carolina—whose plan is estimated to run out of money by 2017— the General Assembly is considering funding options to keep it going, such as making a lump-sum payment of $69 million this year.” “Plans in Alabama, Kentucky, Ohio South Carolina, Texas and West Virginia are currently closed to new enrollments.” “Colorado’s plan is being wound down.” www.skloff.com

Traditional 529 – Pay Higher Education Expenses Tax Free www.skloff.com

Traditional 529 – Estate Planning Benefits 529s are one of the most powerful, lowest cost estate planning vehicles. Contributions made to a 529 are removed from your estate. Unlike most solutions that remove assets from estates and leave little control over investments and beneficiaries, the 529 allows owners to change investments and beneficiaries every year. Because 529 owners can name a successor to the account when they pass away, a 529 can be used for multiple generations. www.skloff.com

Aaron Skloff, AIF, CFA, MBA Chief Executive Officer Skloff Financial Group 908.464.3060 www.skloff.com

Prepaid College Tuition Plans - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group

by Aaron Skloff, AIF, CFA, MBA on Mar 10, 2010

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Prepaid College Tuition Plans - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group — Presentation Transcript