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Frequently Asked Questions

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Prepaid529 permanently closed for new enrollment as of May 1, 2019. Virginia529 is changing the program’s benefit structure and is in the process of creating a new similar program. Details for the new program are still being finalized. There will be no changes to existing Prepaid529 contracts, and current contracts will retain the Prepaid529 benefit structure in effect at the time of purchase.

Earnings grow free from state and federal taxes when used for qualified expenses. Taxpayers may deduct from individual Virginia taxable income contributions of up to $4,000 per account per year made to a Virginia529 account. If you contribute more than $4,000 to an account in one year, you may deduct up to $4,000 per year until you have claimed all of your contributions.

Prepaid529 funds undergraduate in-state tuition and mandatory fees assessed to all students at Virginia public two- and four-year institutions. It does not cover room and board, books, supplies and other qualified higher education expenses. Prepaid529 also does not cover any additional charges of any type for specific courses of study, such as nursing or engineering, that an institution may require or for more than a normal full-time course load. Some families choose to save for these other costs with a Virginia529 savings account, such as Invest529 or CollegeAmerica, as a child may be the beneficiary of more than one Virginia529 account.

Virginia public institutions of higher education include a number of options, giving you a great deal of choice for using your Prepaid529 account. Find a list on the website of the State Council of Higher Education for Virginia (SCHEV) under “Virginia Public Colleges and Universities.” Note: you may use your Prepaid529 account toward tuition at schools listed under “Private & Out-of-State Institutions” on this page, however your benefit will be different and may not cover the full cost of tuition and mandatory fees.

No. Students can use Prepaid529 accounts at private Virginia colleges and universities and schools outside of Virginia, but the benefits differ.

At private colleges and universities in Virginia, Prepaid529 pays the lesser of the following:

  • Payments + actual rate of return on payments
  • The highest Virginia public institution tuition and mandatory fees

At public or private colleges and universities outside Virginia, Prepaid529 pays the lesser of the following:

  • Payments + reasonable rate of return* on payments
  • The average Virginia public institution tuition and mandatory fees

* This is determined by the Virginia529 Board and currently follows the quarterly performance of the Institutional Money Funds Index as reported in the Money Fund MonitorTM by iMoneyNet.

Prepaid529 should not affect a student’s eligibility for merit–based scholarships. If your child receives a scholarship, you have several options including:

  • Keeping the account to apply to future educational needs, such as graduate school
  • Rolling over a portion of the contract to an Invest529 account to be used for qualified expenses not covered by the scholarship
  • Transferring the account to a younger member of the family
  • Requesting a refund of an amount up to the value of the scholarship without penalty, although payment of taxes on the earnings may be required

529 accounts, including Prepaid529, may have an impact on financial aid offers from colleges and universities. In the calculation of a student’s Expected Family Contribution (EFC) for financial aid, 529 accounts with a parent or a dependent student listed as the account owner are assessed at a maximum of 5.65 percent of the account’s value, depending on other reportable household assets. 529 accounts owned by an independent student, a non–custodial parent or a third party (for instance a grandparent) are assessed at higher rates.

You can elect to continue to own and make payments to your Prepaid529 account. Your child may use his or her paid-in-full account at any eligible institution to which he or she applies and is accepted. However, if your child chooses to attend a Virginia public college or university and is no longer eligible for in-state tuition, Virginia529 will not pay the difference between the in-state and out-of-state resident rates.