529 Plans - Maryland - (cool) progeny

Average tuition at a Maryland public university has increased by about 65% during the past decade. While this may be lower than tuition increases in other states, family income and financial aid have typically not kept pace with these costs. This gap is forcing students to borrow more money for education than ever. In fact, student loan debt has now overtaken credit card debt in the U.S. (Wall Street Journal, August 9, 2010). In addition, many students are resorting to higher risk, unregulated, private student loans, which may have variable interest rates that can change with little warning and have fewer consumer protections than government loans.

To reverse this trend, the College Savings Plans of Maryland wants to help families understand the importance of saving for college—and that it’s never too early or too late to begin. Many families find that the easiest and most affordable way to begin saving is to invest in a 529 savings plan. A 529 plan is nearly always operated by a state and offers family and friends a tax-advantaged opportunity to save for college on behalf of a beneficiary. Tax advantages to 529 plans often include state income deductions or credits, as well as tax-deferred growth potential and tax-free earnings at the federal level when funds are used for eligible college expenses.

For Marylanders, the College Savings Plans of Maryland offers two 529 plans: the Maryland Prepaid College Trust and the Maryland College Investment Plan. The Prepaid College Trust allows you to lock in tomorrow’s tuition at today’s prices, and is backed by a Maryland Legislative Guarantee. The College Investment Plan, managed by T. Rowe Price, allows families to start with as little as $25 a month through a variety of investment options. Both are the only 529 plans eligible for a Maryland state income deduction. And money saved in the Prepaid College Trust and the College Investment Plan can be used at nearly any college nationwide that is U.S. accredited and eligible to accept federal student aid. Depending on the Plan you choose, funds can even be used toward graduate schools as well as eligible trade and technical schools.

For more on Maryland’s 529 Plans, register for a free webinar. Webinars will be held on Tuesday, March 12 from 7-8 pm, and Friday, April 5 from 12-1 pm.

The College Savings Plans of Maryland will also be holding in-person sessions around the state throughout March.

Please carefully read the Enrollment Kit which describes the investment objectives, risks, expenses and other important information that you should consider before you invest in the College Savings Plans of Maryland. The Enrollment Kit is available online or by calling 1-888-4MD-GRAD. Also, if you or your beneficiary live outside of Maryland, you should consider before investing whether your state or your beneficiary’s state offers state tax or other benefits for investing in its 529 plan.