He added that savings plans have the flexibility to make customers happier than prepayment plans, whose rates of return largely depend on steady tuition inflation and enrollment of a child at an in-state public college. Not surprisingly, some supporters and managers of prepayment programs were unhappy or downright angry about the rankings, arguing that Kiplinger's was unfair to compare two types of programs that have different benefits. To lump all of us together is comparing apples to oranges. Many financial advisers say that if parents save for college when a child is young, and tuition inflation in the United States continues to be modest, the parents will make much more money through an aggressively invested savings plan than through a prepayment plan. Both types of programs offer federal and state income-tax breaks, as well as other tax incentives for investing.
Many states allow investors to use the savings at any U.S. college.
Some states guarantee the investments, and some assess large fees and penalties if money is withdrawn early or not used for college. All of these factors were used by Kristin Davis, senior associate editor at Kiplinger's, to rank the programs. She said the comparisons were fair and useful, since residents of most states have the option of investing in their state's program or turning to another kind in a different state.