The Guaranteed Tuition Plan (GTP) is offered by the State of Texas so that those saving for a child's or grandchild's education can lock in tuition for college at current prices.  The principal advantage of the GTP is that the plan benefits are constitutionally guaranteed by the State of Texas.  A parent or grandparent may purchase a contract in the GTP for the minor, and that minor’s college tuition is guaranteed when they enter college.  Other advantages of the GTP are that the distributions made are tax-free and the amounts given by the donor are not includable in that donor’s estate.  The obvious disadvantage is lack of control if the beneficiary does not want to go to college or receives a full scholarship.  The donor may receive a refund equal to the average amount of college tuition.  This will result in that money being includable in that person’s estate if they do not dispose of it by gift again.

Last updated on January 6, 2011 by Glenn Karisch