Which of the following is a difference between a prepaid tuition plan and a college savings plan?
A. One is free from federal income tax, while the other is not.
B. One is limited in its investment options, while the other one isn't.
C. One covers all college expenses, while the other covers only
tuition.
D. One can be used for community college expenses, while the other
cannot.

a

Explanation:

The prepaid tuition plan allows plan owners to lock in tuition rates and fee amounts at participating schools at the time of their purchase, protecting them against rising college costs. Payments are made either in lump sums or installments. In contrast, college savings plans are investment vehicles. Account owners and others contribute to the account, and the money is invested in an investment fund or funds, such as a mutual fund. The funds grow tax-free over the years, so that the money can be withdrawn for qualified educational expenses without incurring any tax charge.

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One covers all college expenses, while other covers only tuition.

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