I do not claim to know the specifics of GSP, as I am not a purchaser - so I take what the folks here who are say. If bdn has no gain, then why will he be paying 0.49% fees on $800,000 and not $400,000? Additionally, if the "value" of his holdings is $800,000 vs. $400,000 contribution, then in my mind, it in fact is an investment vehicle. Whether you look at it in monetary terms or other terms in what it buys - it is buying something twice the value of what he paid. We can go tit for tat where you'll claim that it is buying 4 years of tuition - same as what he purchased years ago, so in your mind no gain. I see it that the value of that tuition has increased and therefore there is a gain - just the same as if you were saving the dollars in a 529 savings plan - if you start off with $10,000 (which buys one year of tuition), and some years later it is $20,000 - clearly there is a $10,000 gain - isn't there? But it still buys the same one year of tuition - so why do you consider the prepaid as not having any gain? The value of what you purchased has in fact increased.
If there's no gain, wonderful - bdn only pays $2000. However, I don't think your logic will prevail.