Saving for college: here's an idea
By KIMBERLY GLEASON
For the Banner Graphic
In today's economy, many people are concerned about their future and the future of their children.
Indiana State Treasurer Richard Mourdock, Chairman of the Indiana Education Savings Authority (IESA), is offering parents a new strategy for saving for their children's future.
"The 529 Plan is a product of the IRS," Mourdock said. "It allows people to save for college without taxing on the earnings."
Indiana started the program in 1991 and last month, changed from JP Morgan/Chase to Upromise, owned by the Sallie Mae Corporation.
"Of the 50 states, Indiana was ranked 45," Mourdock told The Brazil Times. "With the change from Morgan/Chase to Upromise we are now the fourth lowest of all the states in cost."
The reason for the change came down to the basic number crunching.
"Morgan/Chase charged a relatively high fee for every person, I think it was $250 base fee. With Upromise, a parent, grandparent or guardian can start saving for their child's future with only $25. That is a big difference, especially now with the economy," he said.
Morgan was designed for families that could afford college, but Mourdock wants the families that can't afford it to have a chance.
"Upromise specializes in the 529 rewards for middle to low income families," he said.
"Indiana taxpayers are eligible for a state income tax credit of 20 percent of contributions to their College Choice 529 account, up to $1,000 credit per year."
Students may then use this money anywhere in the United States or any training program or accreditation.
Mourdock explained if the student decides school isn't for them, then the funds can be assigned to another beneficiary or the money may be taken out with tax.
"A newborn today will be looking at a state school cost of $180,000-200,000 by the time they are 18." Mourdock said. "This will help to reduce the amount of debt for students. I encourage parents with a young child to save and talk to their kids. By teaching kids to save and the value of an education."
Another feature that adds to the Upromise appeal is rewards.
"With the Upromise rewards, parents can spend money while saving. Things people do everyday such as: shopping, eating out and filling their tank," he said. "The rewards help families earn extra money for college because of the agreements reached with some of America's leading companies. The money that is earned from purchases that are made with a registered credit or debit card goes into the specified Upromise account."
"In turn, it becomes an actual savings for college, by linking the Upromise account to the specified 529 account, the rewards earning are transferred to the College Choice 529 account," he said.
Mourdock was up front about the current education level in Indiana by explaining that of the 50 states, Indiana is ranked 45th in the nation with adults who have a bachelor degree.
"In 10 years, the average education level of retirees will be higher than the education level of the work force, this will be the first time that has happened," he said. "In a time when we have to be competing globally we are dumbing-down."
Mourdock's fear is that Indiana will not be able to compete with other states and as a result, future children will suffer.
"Every child deserves the chance to go to college," Mourdock said. "We hope this will give parents another option when saving for their child's future."
For more information log onto http://www.upromise.com or call 1-888-434-9111 from 7 a.m.-11:30 P.M. Eastern Standard Time (EST), Monday through Friday and 9 a.m.-9 p.m. on weekends.
Kimberly Gleason is a reporter for the Brazil Times, sister newspaper of the Banner Graphic