I have been looking into college Illinois for my grandchildren and am very disappointed. It looks fairly risky. Would I be better off setting up separate mutual funds on their behalf, through my Fidelity Investments.(Grandson 3 years old and granddaughter 8 months)
Terry Says: The risk with CollegeIllinois (the prepaid tuition plan) is that the State won’t have the money to pay for the college terms when the time comes. Of course, they could issue tuition vouchers for Illinois institutions to make good on their promise — but it’s hard for colleges to pay professors with vouchers!
Instead, I suggest you open a 529 College Savings Plan account with Fidelity, where the money will all grow tax-FREE for use at any college. And it won’t count against them in financial aid calculations if it’s in a 529 plan. AND, they can’t just take the money and spend it at age 18 (or age 21) as they could if it were in a “custodial” account. So open the 529 –you can put a LOT of money away (5 years of the allowable $14,000 gift, all at one time, each of you, for each grandchild!), or just start with a small amount and keep adding to the account at any time for birthdays, etc.