December
17, 2004
MHC
Joins More Than 240 Private Colleges in National Prepaid
Tuition Program
Mount Holyoke is participating
in Independent 529 Plan, a new prepaid college tuition plan tailored
specifically for private colleges. Responding to a national call
to make higher education more affordable and more accessible
to students, MHC has joined with more than 240 private colleges
and universities across the country to offer a tax-advantaged
way for families to save for tuition.
“We see this new plan as part of our ongoing effort to make higher education
accessible to more families,” said Mary Jo Maydew, vice president for finance
and administration. “Independent 529 Plan allows contributors to lock in
tomorrow’s tuition at less than today’s price.”
Section 529 Plans, named for the IRS code that defines them, have gained in popularity
over the last decade. Families are attracted to the plans because earnings on
the accounts generate no federal income tax if used as intended for higher education
purposes. (The law allowing federal income tax-free qualified withdrawals is
set to expire December 31, 2010. Congress may or may not extend this law beyond
this date. Future changes in the law may create adverse tax consequences, or
lead to termination of the Plan.) As with all 529 programs, assets in an Independent
529 Plan account are transferable to other members of the family, and refunds
are available if the student receives a scholarship or decides not to attend
college. Additionally, in the case of Independent 529 Plan, assets are refundable
if the student attends a school outside of Tuition Plan Consortium.
For purchasers, the effectiveness of Independent 529 Plan is not dependent on
the performance of the stock or bond markets. Rather, contributions actually
go toward prepurchasing tuition, in part or in whole, at less than today’s
price because each school in the plan actually offers plan participants a discount
from current tuition rates. (All references to tuition include mandatory fees.
The program does not cover room and board at this time.)
“Regardless of whether a student attends Mount Holyoke or another one of
the member colleges, Independent 529 Plan represents a way for parents to contribute
to, and pay for, private college without worrying about either investment risk
or tuition inflation,” said Maydew.
“Independent 529 Plan proceeds can be used at any of the participating
colleges. Think of it as buying a shopping certificate for use at any of the
stores at a mall,” said Doug Brown, president and CEO of Tuition Plan Consortium,
the nonprofit group that oversees the plan. “Students don’t choose
their college at the time of purchase, but years later, after they have applied
and been accepted in the regular
manner.”
The program manager of the plan is TIAA-CREF Tuition Financing, Inc. Its investments
are managed by TIAA-CREF Trust Company, FSB, an affiliate of Teachers Insurance
and Annuity Association Retirement Equities education and research institutions.
For more information on the plan, go to www.independent529plan.org.
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