Payment Options

Q: What payment options are available?

A: Three options:

• A single lump-sum payment;
• A monthly payment plan of equal payments each month until October of the year the child enters college; and
• A five-year installment plan of 55 equal monthly payments. This plan is only available for students who are enrolled in or below the eighth grade.

Q: What is the cost of the various plans?

A: Florida Prepaid College Plan contracts are priced based on the plan chosen, the payment option chosen, and the age of the beneficiary at the time the contract is purchased. Costs for each plan and payment option are delineated in the Enrollment Kit and in the "Plan Prices" section of this site. The Florida Prepaid College Board evaluates the contract prices annually and determines whether the prices must be increased in order to meet the projected costs associated with the contracts. Although contract prices may increase for future account owners, the price established for a contract when it is purchased will not change, regardless of subsequent increases in registration fees.

Q: How is the price of a Prepaid Plan contract established?

A: The Florida Prepaid College Board approves the price structure for the various contract plans and payment options on an annual basis. The Board's decision is based on an actuarial analysis of the funds necessary to yield sufficient interest to meet the projected future cost of state university or community college fees.

Q: How do I make installment payments?

A: Many account owners enjoy the convenience of having their payments automatically transferred from their checking or savings accounts. In addition, many account owners enjoy the ease of making monthly payments through payroll deduction. Your payroll or personnel office can provide information about the availability of this benefit. Monthly payments may also be made through a coupon book.

Q: What is the effective interest rate of the monthly payment plan and the five-year installment plan?

A: The monthly and five-year payment plans include an average effective interest rate of 4.42%. Participants signing up in future years may have payments which reflect a different rate. Once a contract is purchased, the designated payment amount will not change.

Q: May I pay tuition with a lump-sum payment?

A: Yes.

Q: Instead of using the installment plan, could I borrow money to make the lump-sum payment?

A: Yes. A bank or other financial institution may be willing to lend you money to make the lump-sum payment. You may then arrange payment terms with the financial institution that may be more flexible than those in the Prepaid Plan's installment payment plans. Interest on a loan secured by a home mortgage, used to finance the lump-sum payment, may be deductible for Federal income tax purposes, with certain restrictions. Detailed information regarding the tax consequences are available from your tax advisor. (Neither monies paid into the plan nor benefits accrued through the plan may be pledged for the purpose of securing a loan.)

Q: May I have payments withdrawn from my checking or savings account?

A: Yes. Most financial institutions permit deductions from a checking or savings account for the Florida Prepaid College Plan through the Automated Clearinghouse (ACH). Many account owners find that monthly deductions from a bank or credit union account are the most convenient method of payment. You may consult your particular financial institution to see if it provides this service. Each account owner who selects an installment plan will be mailed an application to make payments through automatic deduction.

Q: May I make installment payments through payroll deduction?

A: Yes. Many account owners find that monthly payroll deductions are the most convenient method of payment. Provisions have been made for employees of the State of Florida and other public and private employers to receive payroll deductions to participate in the Prepaid Plan. Your payroll or personnel department can provide more information about the availability of this benefit.

Q: May account owners withdraw funds from a 401k retirement plan to pay for the Florida Prepaid College Plan?

A: Since these plans are administered by individual employers, applicants should consult their employers.

Q: May the account owner and survivor of a contract establish split payments?

A: The Board will issue only one coupon book to the account owner; however, anyone may make a payment to the account by sending the payment to us at P.O. Box 31088, Tampa, Florida 33631-3088. For posting purposes, the check must include the account number(s) for which payment is intended.

Q: May I make a "down payment" on a tuition plan and pay the remainder in installments?

A: No. Participants wishing to finance a payment to the Florida Prepaid College Plan should consider making a full lump-sum payment or borrowing the amount they wish to finance from their financial institution.

Q: If I choose the installment plan, may I pay it off early?

A: Yes. Participants may call Customer Service at 1-800-552-GRAD (4723) to receive a payoff amount. There is no prepayment penalty.

Q: May I make a larger payment than my normal monthly payment?

A: Yes. A larger payment will not reduce the total payment amount you must make under the installment plan. It will merely allow you to pay off this total more quickly. It may also serve as a "cushion" if you are unable to make a payment in a future month. Only by requesting an early payoff of the entire amount will a "prepayment" result in a reduction of the total payments due on the installment plan.

Q: May I borrow against my payments or the contract benefits?

A: No. Neither monies paid into the plan nor benefits accrued through the plan may be pledged for the purpose of securing a loan.

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