A New Way to Pre-Pay Virginia College Tuition Expenses

By Sarah Mouser, CFP®, CTS™, CES™

In April of 2019, Virginia529 – the state agency managing 529 college savings plans – announced that its pre-paid tuition plan, formally known as Prepaid529, would close to new investors to make way for a new program called Tuition Track Portfolio.

The reason for this change is to give families an option that could better shield college savings from market volatility and ever-rising college tuition rates.

What if I have a Prepaid529 plan?

If you previously purchased semesters through the Prepaid529 program you will not lose these benefits, however new purchases are no longer available. For resources, details, and instructions on managing and using your Prepaid529 account, visit https://www.virginia529.com/invest/prepaid/. If you are a Cassaday & Company, Inc. client, we are here to answer any questions you might have and will help you navigate the best course of action for your 529 plans. Please reach out to your advisor to discuss.

How Prepaid529 Plans Worked

Prepaid529 was based on the ability to buy semesters to a Virginia public college or university which would cover tuition and mandatory fees for a full-time course load in a general course of study. When purchasing semesters, the cost was based on the child’s age at the time of purchase with lower rates for younger children, allowing the state to hold onto your money longer, and high rates for older children.

If the student were to attend a private or out-of-state college or university, additional out of pocket expenses would likely be required. To pay for private or out-of-state tuition, you receive from the plan the lesser of 1) your plan contract payments made plus a reasonable rate of return or 2) the average in-state undergraduate tuition and mandatory fees at a Virginia public institution in the semester in which benefits are used. In other words, your pre-paid plan would convert to a pool of funds that could be applied to a non-Virginia or private school.

How Tuition Track Portfolio Plans Work

While Tuition Track Portfolio is still a “pre-pay” program, how the funds can be used has changed. Exclusive to Virginia residents, Tuition Track Portfolio is designed to keep pace with average tuition growth. Rather than buying “semesters,” you now purchase “units.” Each year, Virginia529 calculates the average annual tuition cost for public Virginia colleges and divides that cost by 100 units.

Example: If the current average annual tuition to a Virginia public school is $15,000, each unit would cost $150.


You can make a one-time contribution, which purchases unit increments with each dollar invested, or you can put your purchases on autopilot by setting up automated monthly contributions from your checking or savings account.

Every year, the cost to purchase a new unit shifts to match average tuition costs. When it is time to use your units, your student will receive one year of current average tuition for every 100 units previously purchased, regardless of how much tuition rates have grown.

To cover the cost of more expensive schools, consider buying more units. For less expensive schools, additional units now have the flexibility to cover qualified expenses beyond tuition, such as room & board or meal plans.


The Tuition Track Portfolio plan is designed to protect education savings from volatility and maintain its value. Units can be used for public, private, or even out-of-state schools. Below are current average rates and conversion units for in-state and out-of-state schools, as well as rates for popular Virginia colleges and universities:


Virginia529 offers different savings options to choose from, including the Invest529 and CollegeAmerica 529 plans designed to invest your savings into portfolios according to your risk tolerance, objectives, and time horizon. These plans offer their own benefits, incentives, and flexibility. It is important to discuss your education planning goals with your financial advisor, so you can select options that best support your needs.


Additional Education Planning Resources:



Disclosure: A 529 is a college savings plan that allows individuals to save for college on a tax-advantaged basis. Every state offers at least one 529 plan. Before buying a 529 plan, you should inquire about the particular plan and its fees and expenses. You should also consider that certain states offer tax benefits and fee savings to in-state residents. Whether a state tax deduction and/or application fee savings are available depends on your state of residence. For tax advice, consult your tax professional. Non-qualifying distribution earnings are taxable and subject to a 10 percent tax penalty. More information about 529 plans is available in each issuer’s official statement, which should be read carefully before investing.





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