- The Washington Times - Wednesday, December 25, 2002

More than 460 families have enrolled in the D.C. College Savings Plan.
The program, which helps D.C. residents put away money for higher-education costs, has received $1.8 million in contributions since its introduction Nov. 13.
Officials say they are pleased with the early response, but they hope more families will contribute in the next week. D.C. residents qualify for as much as $3,000 in tax deductions on their individual income tax returns if they contribute before Dec. 31.
Married couples who contribute before the end of the year may qualify for as much as $6,000 in tax deductions when filing jointly.
"You can't get the tax deduction in April if you don't put the money in this year," said D.C. Treasurer N. Anthony Calhoun, whose office administers the program.
Individuals can set up a D.C. College Savings Plan for anyone including themselves with a minimum $100 contribution. The money in the fund can be used tax-free to pay for tuition, room and board, fees, textbooks and supplies required for attendance or enrollment at any college, university or vocational school in the United States.
D.C. residents pay nothing to enroll in the program but are charged a $15 annual maintenance fee. Those who reside outside the District may enroll in the program, but must pay a $25 enrollment fee and a $30 annual maintenance fee.
The District is one of the few jurisdictions in the nation to open its college savings plan to nonresidents, Mr. Calhoun said. "We're a small jurisdiction. It's to our advantage to open it up," he said.
The D.C. plan offers three ways to invest: an age-based portfolio that changes the proportion of equity, bond and money market funds as the account beneficiary reaches certain ages; six single-fund investment options, including conservative and aggressive funds; and a principal investment that guarantees both a return of money invested and a fixed rate of return of at least 3 percent.
So far, the age-based portfolio has been the most popular, with most of the money invested for children 5 and younger, said Barbara J. Krumsiek, president and chief executive of Calvert Asset Management Co., which invests the money for the District.
"That means it's either parents or grandparents who are making a long-term pledge to higher education," she said.
The average cost for a year at a public four-year college rose 9.6 percent this year. The cost for a year at a private four-year college rose 5.8 percent, to an average of $18,273, D.C. officials said.
The District has introduced its College Savings Plan at a time when rising school fees and a weak economy have forced some states to raise the costs of their prepaid-tuition plans.
The 529 savings plans, such as the one the District offers, allow families to save money in a special account. Contributions can vary, and the plans tend to offer a variable rate of return.
Prepaid-tuition plans cover tuition and fees, usually at any public college or university in the state that offers the plans. Families either pay a lump sum or make monthly payments to enroll, and the money is released when the child is ready for college.
Several states, citing the weak economy and rising school fees, have raised the costs of their prepaid plans this year.
Proponents of the D.C. College Savings Plan hope potential contributors won't be scared away by news of the increased costs of the prepaid-tuition plans.
"The bottom line is that it's always a good time to start saving," said Diana Cantor, chairman of the College Savings Plans Network and executive director of Virginia's fund.
The cost of prepaid tuition has increased as much as 30 percent in Maryland and Virginia.
West Virginia delayed its enrollment period two months, to Nov. 1, and raised the price of its prepaid-tuition plan 15 percent. Those moves followed warnings in September that the state would be $16 million short if everyone invested in its tuition fund cashed in.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide