Which of the Following Does a Prepaid Tuition Plan Not Cover?
Understand the limitations of prepaid tuition plans, including what expenses are covered and which costs students may need to budget for separately.
Prepaid tuition plans help families manage rising college costs by allowing them to pay for future tuition at today’s rates. Sponsored by states or institutions, these plans offer significant savings but come with limitations on what they cover.
While they ease tuition payments, many other essential expenses fall outside their scope. Understanding these exclusions is crucial for families preparing for the full cost of attendance.
Tuition Coverage Basics
Prepaid tuition plans lock in future tuition costs at participating colleges and universities, shielding families from inflation. These plans typically cover credit hours at in-state public institutions. Some states offer contracts based on years or semesters, while others allow families to purchase individual credit hours.
Coverage is generally limited to tuition and mandatory fees directly tied to enrollment. Some plans include required fees like technology or lab fees, but they do not cover discretionary charges such as course materials or extracurricular activities. While some states allow funds to be used at private or out-of-state institutions, payouts are often based on the average in-state public tuition rate rather than full coverage.
Housing and Meal Plans
Prepaid tuition plans do not cover housing and meal plans, which account for a significant portion of college expenses. Room and board costs vary based on location, institution, and type of accommodation. On-campus housing typically includes utilities and internet, but these must be paid separately through direct payments, loans, or savings plans like a 529 account.
Meal plans, often required for dorm residents, also fall outside prepaid tuition coverage. Universities offer tiered meal plans, with costs varying based on the number of meals provided. Since these expenses are not categorized as tuition or mandatory fees, families must budget for them separately. Some students opt for off-campus housing and grocery shopping to save money, but this requires careful planning.
Course Materials and Supplies
Prepaid tuition plans do not cover textbooks and course materials, which can be a major expense. Textbooks range from $50 to over $300 per book, with costs especially high in fields like engineering, medicine, and law. Some universities bundle digital textbooks into tuition, but this varies.
Students often need additional supplies depending on their major. Architecture and graphic design students may require specialized tools and software like Adobe Creative Cloud, which costs around $20 per month. High-performance laptops needed for coding or data analysis can exceed $1,500. These expenses require alternative funding sources.
Mandatory vs. Optional Fees
Prepaid tuition plans cover mandatory fees required for all students, such as health services, campus security, and technology infrastructure. Some states specify which fees are included, preventing unexpected costs. For example, Florida’s Prepaid College Plan includes the tuition differential fee, which many universities charge to supplement state funding.
Optional fees, however, are not covered. Study abroad programs, which include travel and lodging, can cost thousands of dollars. Course-specific fees, such as private music instruction or professional certification exams, also fall outside prepaid tuition coverage. Parking permits and athletic facility memberships, which may be necessary for commuting students or those using campus gyms, must be paid separately.
Additional Costs Outside Scope
Even with prepaid tuition covering academic expenses, many costs remain unaccounted for, requiring families to plan accordingly.
Transportation and Travel
Students attending college away from home must budget for transportation. Commuters face fuel, vehicle maintenance, and public transit costs. Those attending out-of-state schools may have significant airfare expenses, especially during peak travel seasons. Some universities charge transportation fees for campus shuttle services, which are not always included in prepaid tuition coverage.
Health Insurance and Medical Expenses
Many universities require students to have health insurance, either through a family plan or a school-sponsored policy. School-sponsored insurance can cost between $1,500 and $3,000 per year. Routine medical expenses, including prescriptions, dental care, and vision services, are not covered by prepaid tuition plans, making it necessary for families to budget for healthcare costs.
Extracurricular and Professional Development Costs
Participation in student organizations, club sports, and professional development programs often comes with additional fees. Greek life membership can cost thousands of dollars annually, including dues, housing, and event expenses. Internships and study-abroad programs may require application fees, travel costs, and living expenses not covered by the university. Professional certification exams, such as the CPA exam for accounting students or the LSAT for law school applicants, also require separate registration fees.