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PA 529 Plan Offers Great Incentives to Help Families During "College Savings Month," Says Treasurer Rob McCord(September 12, 2012)
HARRISBURG, Pa., Sept. 12, 2012 (GLOBE NEWSWIRE) -- September is National College Savings Month, and State Treasurer Rob McCord said the Pennsylvania 529 College Savings Program is offering incentives to help more families save for the cost of higher education as opposed to relying too heavily on student loans, which can burden a student for decades.
Throughout the month, Treasurer McCord said the PA 529 program is offering free enrollment – a $50 savings – in the Pennsylvania 529 Guaranteed Savings Plan, and families can enter for a chance to win one of ten $529 college savings accounts at PA529.com.
"Many families recognize the need to save for their child's education, but they delay because of the size of the price tag and because of uncertainty over which way is best to save," said Treasurer McCord. "We want to help get them started now, because the sooner they start, the more time they have for their money to grow. It's important to remember that saving for college can nearly cut the cost of higher education in half versus paying with student loans."
The Treasurer explained a person who contributes $25 a month to a PA 529 account could end up with more than $10,000 after 18 years. Conversely, a person who borrows $10,000 for college with repayment terms of 6.8% for 18 years, could pay $85.94 a month, or a total of $18,563.
"The math is pretty clear. You can either save $10,000 or you could repay over $18,000," said Treasurer McCord. "When compared to the national average, Pennsylvania's college graduates already carry a greater amount of student debt, so we need to make saving for college easier. Plus, when you factor in the great tax advantages of a PA 529 plan, the choice of saving versus borrowing becomes even clearer."
Contributions to PA 529 plans are deductible from Pennsylvania income taxes, grow tax free, and when used for qualified educational expenses, are federal and state tax exempt. Both plans provide flexibility to pay for college expenses at most higher education institutions across the country. Pennsylvanians may deduct contributions from their taxable income up to $13,000 per beneficiary, or up to $26,000 for married couples provided each individual has income of at least the amount deducted.
The Treasurer added families that wish to learn more about the benefits of a 529 plan can view free college savings webinars at PA529.com. The online presentations also allow users to have their questions answered by a PA 529 college savings expert.
The PA 529 College Savings Program provides two ways to save: the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). The primary difference between the two plans is the way savings grow.
The PA 529 GSP is designed to help savings grow to meet the future cost of education. When used for qualified higher education expenses, PA 529 GSP contributions grow based on tuition inflation (subject to fees and premiums). For example, if you save enough for one semester today at a State System of Higher Education university, you will have enough for one semester there in the future, no matter when or how much tuition has increased in the meantime.
Families can open a PA 529 GSP account for free through September – a $50 savings – by using the enrollment code "PlanToday" when prompted.
The second PA 529 plan, the PA 529 IP, features low fees and more than a dozen conservative and aggressive investment options from The Vanguard Group, one of the nation's largest financial services companies.
The PA 529 College Savings Program marked a strong, record-setting year for the fiscal year ended June 30. With a record-breaking 167,260 open accounts, total program assets – which totaled nearly $2.5 billion – grew by 6.56% last fiscal year.
For more information, visit PA529.com or call 1-800-440-4000 to open an account or make a contribution.
The Pennsylvania 529 College Savings Program sponsors two plans – the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). The guarantee of the PA 529 Guaranteed Savings Plan is an obligation of the GSP Fund, not the Commonwealth of Pennsylvania or any state agency. Before investing in either plan, please carefully read that plan's disclosure statement (available at www.PA529.com or by calling 1-800-440-4000) to learn more about that plan, including investment objectives, risks, fees, and tax implications.
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Carrie Fischer Lepore
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