“Pre-paid” college usually takes the form of pre-paid 529 plans, which are tax-advantaged plans that enable families to lock-in the cost of college at the time that they purchase the plan. Considering that every year the cost of college rises about 2 percent to 3 percent, pre-paid college can be a worthwhile option to consider.
Disadvantages to traditional pre-paid college plans include a lack of flexibility in the way the money can be used.
Most 529 prepaid college plans are administered by individual states, and they differ somewhat from state-to-state. Although you can often transfer pre-paid tuition credits from state-to-state, fees do apply, and can add up. For this reason, the biggest saving is when your child attends college in the state where the plan was purchased and administered.