New Pew Report Finds Growing Student Loan Burden; Treasurer McCord Calls Saving a Better, More Affordable Alternative
PA 529 College Savings Program offers free enrollment until Sept. 30, educational webinars, and chance to win $529 account at PA529.com
Harrisburg – According to a Pew Research Center study out this week, nearly one in five U.S. households had college debt in 2010. State Treasurer Rob McCord said that number was double the share of households with student loan debt in 1989, and he stressed the benefits of saving for college with tax-advantaged 529 plans.
“Once again, we see another report that makes clear the burden of student loans continues to mount for American families,” said Treasurer McCord. “The challenges of this economy and long-term tuition inflation have led more students to finance their education with debt, thus more young adults are going to be saddled with repayment obligations and find it more difficult to buy a home, start a family, or save for retirement.”
The Pew report found a record 40% of households headed by someone under the age of 35 have outstanding student loans, and the average outstanding loan balance was nearly $26,700. The study also states while average annual household income dropped 11% between 2007 and 2010, student loan debt over the same period increased 15%.
“Future students can avoid student loans if they and their families start to save for college today,” said Treasurer McCord. “Regardless of whether it is a little or a lot, it is important to save something, because it can be half as expensive to finance a higher education with savings as opposed loans you must repay with interest. Now is the time to start and one of the best ways to do so is with the tax benefits of PA 529 College Savings Plan.”
To make it easier for the state’s families to open and begin to save with a PA 529 College Savings Plan, Treasurer McCord added enrollment in the Guaranteed Savings Plan is free through the end of September, which is National College Savings Month. The free enrollment is a $50 savings. To take advantage of the offer, use the enrollment code “PlanToday” when prompted.
Families also can enter for a chance to win one of ten $529 college savings accounts at PA529.com.
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). Both plans provide flexibility to pay for college expenses at most higher education institutions across the country. 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.
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.
Contributions to a PA 529 plan – including funds earned through Upromise – are deductible from Pennsylvania income taxes (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), grow tax free, and when used for qualified educational expenses, are federal and state tax exempt.
Visit PA529.com or call 1-800-440-4000 to learn more information, open an account, or make a contribution to a PA 529 plan. The website also offers free college savings webinars. The live online presentations allow participants to have their questions answered by a PA 529 college savings expert.
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Media contact: Carrie Fischer Lepore, 717-772-2416 or news@patreasury.gov
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