- The Washington Times - Saturday, April 17, 2004

Has your son or daughter’s college journey sparked your own interest in higher education? Many parents are going back to college along with their children, drawn by changing careers, professional certification requirements and even the occasional intellectual itch. Adult students are the fastest-growing educational demographic, according to the U.S. Department of Education.

Yet with tuition topping out at nearly $20,000 a year for a private college or university, how can you raise the funds to go?

Look no further than the plan that may have helped your son or daughter through school — the state-sponsored 529 plan.

“There are no age limits on most 529 plans,” says certified public accountant Joseph Hurley, author of “The Best Way to Save for College — A Complete Guide to 529 Plans.” “So these kinds of plans are very useful for adults planning to go back to college.”

The 529 savings plans generally allow for higher contributions than other education savings plans. Potential savings can be significant because the amount you invest is tax-free.



What can you use the money to pay? Things such as tuition, fees, books and supplies.

Be sure to read the fine print, however, because not all 529 plans are created equal. Most states offer at least a couple different plans.

Maryland, for example, offers two types of 529 plans: a Prepaid College Trust and a College Investment Plan, managed by T. Rowe Price. Neither plan has a sales commission, or load, and both can earn a state income tax deduction. The Prepaid College Trust includes a legislative guarantee that provides state backing. Prepaid College Trusts are invested primarily in no-load equity and fixed mutual funds by the Maryland Higher Education Investment Board. Beneficiaries do not have to attend a Maryland college.

Meanwhile, Virginia’s plan allows for three options. The Virginia Prepaid Education Program (VPEP) locks in future college costs for students currently in ninth grade or younger. VPEP covers full tuition and mandatory fees at Virginia public colleges. The Virginia Education Savings Trust (VEST) offers a selection of 11 investment funds open to students of all ages regardless of state. VEST covers all major college expenses, including tuition, fees, room and board, textbooks and other supplies, such as computers. Finally, CollegeAmerica, the state’s newest 529 plan, partners with the mutual-fund company American Funds.

In the District, students and their parents can take advantage of the D.C. College Savings Plan, managed by the Calvert Group. The plan offers an age-based portfolio as well as six single-fund options. There is no enrollment fee for District residents. Residents do pay an annual maintenance fee and certain administration expenses.

Just because you live in a particular state doesn’t mean you are bound to use that state’s plan. You can shop around.

“About 20 percent of our enrollees are nonresidents,” says Brenda Mathis, program director for the D.C. College Savings Plan. The plan started in November 2002 and already has $25 million in assets.

Just beware of some out-of-state fees. Nonresidents also may lose the in-state tax credit that typically accompanies a state 529.

Roth IRAs allow a maximum contribution of $3,000 per year and offer no tax deduction. Future earnings, however, are tax-sheltered. Roth IRAs are considered a good bet when saving for both retirement and college, or if the holder will be older than 59 at the time of withdrawal.

Some caveats: Most education savings accounts are considered part of a student’s assets and can affect the financial aid package. Many savings plans have income limitations, so check with your financial adviser about the plan that is right for you.

MORE INFO:

BOOKS —

• “THE BEST WAY TO SAVE FOR COLLEGE: A COMPLETE GUIDE TO 529 PLANS, 2003-2004,” BY JOSEPH HURLEY, BONACOM PUBLICATIONS, 2003. MR. HURLEY, A CERTIFIED PUBLIC ACCOUNTANT, DESCRIBES 529 PLANS AND HOW THEY WORK, COMPARING THEM TO OTHER ALTERNATIVES.

• “TAMING THE TUITION TIGER: GETTING THE MONEY TO GRADUATE — WITH 529 PLANS, SCHOLARSHIPS, FINANCIAL AID, AND MORE,” BY KATHY KRISTOF, BLOOMBERG PRESS, 2003. THIS PRACTICAL GUIDE, WHICH INCLUDES HELPFUL WORKSHEETS, OFFERS TOOLS AND STRATEGIES FOR SAVING AND INVESTING TO PAY FOR EDUCATION.

• “529 & OTHER COLLEGE SAVINGS PLANS FOR DUMMIES,” BY MARGARET MUNRO, JOHN WILEY & SONS, 2003. PART OF THE POPULAR “FOR DUMMIES” SERIES, THIS BOOK HELPS READERS DETERMINE WHICH SAVINGS PLAN IS BEST FOR THEM.

ONLINE —

• THE FINANCIAL PLANNING ASSOCIATION’S ONLINE JOURNAL OF FINANCIAL PLANNING OFFERS AN ARTICLE BY EDITOR NANCY OPIELA TO HELP PARENTS SORT OUT THE ISSUES INVOLVED IN PLANNING FOR COLLEGE AND RETIREMENT, “TOUGH CHOICES: HELPING PARENTS SAVE FOR COLLEGE AND RETIREMENT” (WWW.FPANET.ORG/JOURNAL/ARTICLES/2001_ISSUES/JFP0601-ART2.CFM).

• FOUNDED BY AUTHOR AND CERTIFIED PUBLIC ACCOUNTANT JOSEPH HURLEY, SAVINGFORCOLLEGE.COM FOCUSES ON UNRAVELING THE MYSTERIES OF THE 529 PLAN.

• THE COLLEGE SAVINGS PLANS NETWORK (WWW.COLLEGESAVINGS.ORG), AN AFFILIATE OF THE NATIONAL ASSOCIATION OF STATE TREASURERS, SERVES AS A CLEARINGHOUSE FOR INFORMATION ON SAVINGS PROGRAMS. THE SITE FEATURES A SECTION OF FREQUENTLY ASKED QUESTIONS AS WELL AS AREAS FOR PARENTS AND GRANDPARENTS.

• OWNED AND OPERATED BY ING NORTH AMERICA INSURANCE CORP., WWW.IHATEFINANCIALPLANNING.COM HAS SIMPLE TIPS AND TOOLS FOR INVESTING, CONTROLLING, TRACKING CASH FLOW AND PLANNING FOR ALL PHASES OF LIFE, INCLUDING COLLEGE AND RETIREMENT.

• WEB SITES FOR MARYLAND (WWW.COLLEGESAVINGSMD.ORG), VIRGINIA (WWW.VIRGINIA529.COM) AND DISTRICT (WWW.DCCOLLEGESAVINGS.COM) RESIDENTS FEATURE INFORMATION ON COLLEGE SAVINGS PLANS SPECIFIC TO THOSE AREAS. EACH SITE OFFERS INFORMATION ON HOW THE PLANS WORK AND EXPLAIN HOW TO ENROLL.

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