A well-managed mutual fund that has low turnover, or limited tax exposure, would serve every bit as well. Cantor disagrees, saying the tax advantages of the state program are hard to beat because state taxes don't have to be paid on interest and earnings. Cantor said she is still fighting misconceptions about the program. The savings can be used anywhere in the country, at either public or private colleges and universities. If a child decides not to go to college, another family member, even the parent, can use the money for tuition.
Investors can pay for only one year or a two-year community college if they choose.
If no one wants to go to college, the owner gets his money back. After three years, he can also get back 90 percent of the interest. For students who attend a public college in Virginia, VPEP pays full tuition and mandatory fees at today's rates. Participants can choose from seven different investment funds to pay for tuition, fees, room and board, textbooks and computers. Bill Herbert, a certified financial planner with Branch Cabell, said VEST is similar to other available programs, but the state is harder to get information from.