I was reading the news about the securities scandal involving College Assurance Plan (CAP) and thought about own decision long ago to get educational plans for our kids.
Before our older daughter reached her first birthday, we bought two sets of educational plans for her–high school and college plans. Not from CAP. Those were the times when some pre-need companies were still offering “traditional” plans. Meaning, a plan with no ceiling. The tuition would be paid by the pre-need company no matter how high it becomes by the time the plan matured. In the case of a child not yet a year old, that means about twelve and sixteen years for a high school and college plan, respectively. Those were the glory days of pre-need companies. By the time we wanted to get plans for our second child, “traditional” plans were no longer being offered. Pre-need companies probably realized how much money they would be losing at the rate that tuition fees increase.
Many of my friends did the same for their kids. One of them bought complete plans–from grade school through college. Seeing them deal with the pre-need company at the start of every schoolyear made me think twice about keeping the plans we had bought for our own children. See, even planholders must “advance” the payment for the tuition then reimburse from the pre-need company. What’s the educational plan for if we would have to raise the money for the tuition anyway? Then, the runaround just to get the reimbursement…
About a year and a half ago, I was a friend’s law office for a meeting. She was one the phone when I arrived. She was having an argument with someone from the pre-need company. The company had promised that they would make arrangements with her sons’ school so that the tuition would be collected directly by the school from the pre-need company. However, upon enrollment, the school had a different story–no such arrangements were made. My friend would have to pay the tuition or the slots reserved for her two sons would be given to other kids. What would a parent do under the circumstances, right? The reason for getting educational plans is to ensure that the kids would be able to go to school, irrespective of the parents’ available cash at the time of enrollment.
We debated for a while whether we should keep the plans or sell them and pay off another chunk of the principal on the house we bought. The question was whether the plans were worth keeping. We sold them and made an average of a hundred per cent profit on each sale. With a huge part of the housing loan out of the way, we created a new “educational fund” for our children. No more third party that would tell us WHEN we can avail of the funds. No more danger that the pre-need company would go bankrupt and we would be left with worthless pieces of paper.
I’m glad we decided to sell them. I am so very glad indeed.