Treasurer McCord Highlights Strong Year-End PA 529 College Savings Plan Performance; Urges Families to Save Before Credit Rates Jump September 1
Credit rates to increase as budget cuts lead to above average tuition inflation at many schools
Harrisburg, PA, Aug. 17, 2011 – Despite volatile conditions in a still-fragile economic recovery, State Treasurer Rob McCord yesterday told the Tuition Account Program Advisory Board that the Pennsylvania 529 College Savings Plan enjoyed a solid year in 2010-2011 and is ramping up its efforts to help more students and families realize their dreams about higher education in the wake of state budget cuts and higher-than-average tuition inflation.
“Even with an uncertain economy, 2010-2011 proved there are still some things you can count on, such as the PA 529 College Savings Program. The Guaranteed Savings Plan, in particular, continued its impressive turnaround and – with investment performance of 18.4% – its best year ever,” said Treasurer McCord, who explained the program’s investment performance helped boost its actuarial funded status to nearly 98% as of June 30. It was just 89% last year.
“The PA 529 GSP is a great option for families because it protects your principal investment, and it protects your savings from market volatility. That’s a large reason why more families are saving with a PA 529 GSP account,” added McCord. “The fund now serves 95,000 accounts, and contributions reached nearly $162 million last year.”
McCord added that the state’s 529 College Savings Program as a whole – which includes the GSP and its counterpart, the PA 529 Investment Plan, had a strong year. The program’s assets totaled $2.347 billion as of June 30, 2011 – an increase of 23.6% from the previous year-end figures. The total number of accounts increased 5.8% from June 30, 2010, and contributions grew 6% during the year.
“When we last met in May, we knew public institutions of higher education would face significant budget cuts, but we didn’t know what impact those cuts would have on tuition. Now, we know the answer,” said Treasurer McCord. “In most cases, actual tuition inflation at colleges and universities is higher than average, so with tuition on the rise, new credit rates for the PA 529 GSP will take effect September 1. That means now is the time to save.”
Treasurer McCord urged parents to open a PA 529 GSP account – or contribute to an existing account – before August 31 to take advantage of last school year’s lower prices. Contributions sent by mail must be postmarked on or before August 31. Online contributions must be made by 10 p.m. EST on August 31 at www.pa529.com, where you can also open an account.
“If there is a silver lining to months of news about budget cuts, tuition increases, and volatile markets, it is that people have a heightened awareness of rising college costs,” said the Treasurer. “Families and students who save now can get more ‘bang for their buck’ by contributing to their PA 529 GSP accounts before the rate increase. Remember, a dollar saved today is one less you have to borrow and pay back with interest down the road.”
To help more families save for higher education, the McCord Treasury is offering free enrollment – a $50 savings – for all new PA 529 GSP accounts opened online during August and September at www.pa529.com. Use code SAVE50 when prompted.
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 at the rate of tuition inflation (subject to fees and premiums). For example, if you save enough for one semester today, you will have enough for one semester in the future no matter when or how much tuition has increased in the meantime. Families saving through the PA 529 GSP receive tax-deferred growth on earnings and tax-free withdrawals when funds are used for qualified educational expenses.
Pennsylvania also offers a second 529 plan, the PA 529 Investment Plan, in which returns are based on financial market performance. The PA 529 Investment Plan features low fees and more than a dozen conservative and aggressive investment options from Vanguard, one of the nation’s largest financial services companies. Families saving in the PA 529 Investment Plan also receive the same great tax advantages as those saving with the PA 529 GSP.
For more information, including 2011-2012 academic year rates as well as premiums, visit www.pa529.com or call 1-800-440-4000 to make a contribution.
Guaranteed Savings Plan
The guarantee of the PA 529 GSP is an obligation of the GSP Fund, not the Commonwealth of Pennsylvania or any state agency. Before investing, please carefully read the GSP Disclosure Statement (available at www.PA529.com or by calling 1-800-440-4000) to learn more about the plan including limitations of the guarantee, risks, fees, premiums, and tax implications of the GSP.
Before investing, please carefully read the IP Disclosure Statement (available at www.PA529.com or by calling 1-800-440-4000) to learn more about the plan including investment objectives, risks, fees, and tax implications of the IP.
Investment returns are not guaranteed, and you could lose money by investing in the Investment Plan.