Section 529 Plans
Section 529 plans, also known as Qualified Tuition Programs (QTP), are among the best ways of saving for a student’s college education. There are two types of section 529 plans, college savings plans and prepaid tuition plans. Both are named after section 529 of the Internal Revenue Code.
A 529 College Savings Plan works much like a 401K or IRA where contributions are invested in mutual funds or similar investments. The account goes up or down in value based on the performance of the particular investment option selected. Funds are not guaranteed.
Prepaid 529 Tuition Plans involve no risk to principal and are often guaranteed by the state. For in-state public colleges, the plan typically pays tuition and required fees. A Prepaid 529 Tuition Plan may also be converted for use at private and out-of-state colleges. If the student decides to attend a private or out-of-state college, the plan will typically pay the average of in-state public college tuition and the student is responsible for any difference.
The method in which University of Missouri (MU) receives payment from these 529 plans also differs:
With a 529 College Savings Plan, the student/parent accesses funds and sends a check to MU
- With a Prepaid 529 Tuition Plan, MU bills the plan directly
Office of Cashiers handles a Prepaid 529 Tuition Plan as follows:
With proper documentation, a student’s account is credited for those fees covered under his prepaid plan before the money is received by MU from the plan. In order for the student to get the credit, we need a letter from the plan’s administrator to Office of Cashiers identifying:
- Student full name
- Student ID
- Name of plan
This information must be submitted by April 15 for summer semester, July 15 for fall semester and by November 15 for spring semester so the student’s account reflects the credit before the first bill for the semester is generated. Otherwise, the credit will not show on this first bill.
Check back with the Office of Cashiers as the semester progresses....
There are changes that may occur and will impact the student account and the prepaid plan payments. Office of Cashiers must be notified of:
- Changes to student’s schedule during the add/drop period
- Changes to student’s schedule after early registration (i.e., regular or late registration)
- Changes to student’s eligibility with the plan (i.e., change from restricted to non-restricted)
- Rate changes reported by the plan
- Financial aid/tuition waivers that reduce part of the tuition amount due
- Add/drop classes which change the tuition bill
- Exhausting the benefit, whether it is calculated by credit hour max or dollar max
Office of Cashiers invoices the Prepaid 529 Plan
Office of Cashiers invoices the plan, sending it near the end of the term after the student can no longer make changes to his schedule and the exact dollar amount is known.
Note: The credit on the student account may be adjusted if the plan does not pay the invoice in full. We make every attempt to clear any confusion or provide any missing information in attempt to receive full payment from the plan.