Maryland Prepaid College Trust
Maryland College Investment Plan
www.collegesavingsmd.org
1-888-4MD-GRAD
All the Information
I.
II.
III.
College Savings Plans of Maryland Overview
Eligibility
Maryland Prepaid College Trust
a.
b.
c.
d.
e.
IV.
Benefits – What Does the Plan Pay For?
Affordable Tuition Plans and Payment Options
Flexibility Features
Refunds
Enrollment and Actuarial Status
Maryland College Investment Plan
a.
b.
V.
VI.
VII.
VIII.
Investment Options
Distributions
Tax Benefits
Plan Comparison
College Savings Plans of Maryland Board
Additional Features & Benefits
2
College Savings Plans of Maryland
Overview
The College Savings Plans of Maryland is an independent, non-profit
Maryland State Agency that offers two Section 529 college savings plans to
help families prepare for the future cost of college and reduce future debt.
• Maryland Prepaid College Trust - allows you to lock-in tomorrow’s college
tuition based on today’s prices and helps to hedge against future tuition
increases
• Maryland College Investment Plan - managed and distributed by T. Rowe
Price, offers investors a variety of investment options
Both plans can be used at nearly any federally accredited college in the
country.
3
Who Can Enroll?
• Maryland Prepaid College Trust
– Open to 12th graders or younger, including newborns
– Either the account holder or child must reside in Maryland or DC at the time of
enrollment
– 2009 – 2010 Enrollment Period: December 1, 2009 through April 5, 2010
• Maryland College Investment Plan
– Invest for children or adults – no age restrictions
– No Maryland or DC residency requirements
– Enrollment open year-round
You may choose either plan – or both!
4
Maryland Prepaid College Trust
With the Maryland Prepaid College Trust, you commit to fixed payments
for a future benefit:
•
When your child goes to college, the Prepaid College Trust will pay the full in-state
or in-county tuition and mandatory fees at any Maryland Public College or
Community College
•
If your child attends an accredited private or out-of-state college, the Prepaid
College Trust will pay up to that year’s weighted average tuition of the Maryland
Public Colleges or Community Colleges
•
The Prepaid College Trust is also backed by a:
MARYLAND LEGISLATIVE GUARANTEE
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Maryland 4-Year Public College Costs
(UNDERGRADUATE IN-STATE TUITION & MANDATORY FEES – ONLY)
St. Mary’s College of Maryland
University of Maryland, Baltimore County
University of Maryland, College Park
Weighted Average Tuition
Towson University
University of Baltimore
Frostburg State University
Salisbury University
Morgan State University
University of Maryland Eastern Shore
Bowie State University
Coppin State University
2009-2010
$13,234
$8,872
$8,053
$8,016*
$7,418
$7,171
$6,684
$6,618
$6,548
$6,082
$6,040
$5,276
*Tuition benefits are paid per semester – A beneficiary attending a private or
out-of-state college for the 2009 – 2010 Academic Year receives up to $4,008
per semester – or the Minimum Benefit - whichever is greater.
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Affordable – Select a Tuition Plan
• University Plan – 1 semester or 1, 2, 3, 4 or 5 years at a 4-year college
• Community College Plan – 1 or 2 years at a Community College
• Two Plus Two Plan – 2 years at a Community College and 2 years at a 4year college
• Existing Account Holders can add additional semesters or years outside of
the enrollment period at current prices
• Encourage other family members to purchase semesters or years!
7
Affordable – Select a Payment Option
• Lump Sum – One-time payment for the full amount of the tuition plan
selected
• Annual Payment – Equal yearly payments
• 5-Year Monthly Payment – 60 equal monthly payments
• Extended Monthly Payment – Equal monthly payments through July of the
Beneficiary’s projected year of high school graduation or year of Initial
Eligibility
• Down Payment – 25%, 40% or 55% of the lump sum price with the
remaining amount to be paid monthly or annually
8
4 Year University Contract Costs vs.
Projected Weighted Average Tuition
$132,655
$140,000
$130,000
$120,000
$110,000
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
$90,260
$66,531
$49,166
8th Grade
4th Grade
Kindergarten
Lump Sum
5-Year Monthly
Annual
Projected Weighted Average Tuition
Extended Monthly
Infant
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Flexible – You Can Change, Use, Transfer or
Delay Using Your Account
• Change your Tuition Plan or Payment Option at nearly any time
• Use your account if the child attends college at least half-time
• Use your account towards graduate school
• Transfer your account to a relative of the child (doesn’t have to be a
sibling)
• Transfer your account to the Maryland College Investment Plan at any time
(may be helpful for children preparing to attend an accredited trade and
technical school)
• Delay using your benefits for up to 10 years after the child graduates high
school plus any time served in active duty of the military
10
Flexible – What Happens if My Child Receives a
Scholarship, Grant or Tuition Remission?
• Use your account toward current or future eligible higher education
expenses such as room & board, books, course specific fees – even
graduate school
• Combine the grant or scholarship with your Prepaid College Trust account
to pay for more of the actual tuition and fees at a private or out-of-state
college – above the weighted average tuition
• Transfer your account to another member of the child’s family
• Request a refund
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Refundable
• Two scenarios would merit a Refund:
– If the child receives a scholarship, grant or tuition remission
– If the child dies or disability prohibits college attendance
• Reduced Refund – Given under all other circumstances. You will receive
your actual payments, less any administrative fees, plus or minus:
– 50% of the earnings/losses on those payments if enrolled < 3 years
– 90% of the earnings/losses on those payments if enrolled ≥ 3 years
• Only the account holder may request a refund
• There are federal and Maryland tax implications for refunds and reduced
refunds
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Enrollment and Actuarial Status
• More than 7,000 students are now eligible to use their tuition benefits in
Maryland and across the country
• Of the eligible students using their accounts:
– 58% use them at private and out-of-state colleges; and
– 42% use them at Maryland public colleges
• As of 6/30/09, the Trust is 92% funded to meet anticipated future tuition
payments and has sufficient funds to pay projected future tuition benefits
for 16 years
13
Maryland College Investment Plan
The Maryland College Investment Plan offers an attractive combination of
financial flexibility, affordability, and tax benefits, as well as investment
management by T. Rowe Price.
• Maryland College Investment Plan offers various investment options:
– Enrollment-Based Portfolios – become more conservatively invested as the
child ages
– Fixed Portfolios – static asset allocations
– Or you can use a mix of both
The assets in the account can be used to help pay for any eligible college
expenses including tuition, fees, room & board, course-specific fees or
supplies.
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Enrollment Based Portfolios
STOCKS
BONDS
BONDS and INCOME
CONSERVATIVE FIXED-INCOME
natural progression of portfolio asset reallocation
Portfolio 2030
Portfolio 2027
Portfolio 2024
2%
100%
Portfolio 2021
17%
100%
83%
98%
Portfolio 2018
Portfolio 2015
Portfolio 2012
Portfolio for College
17%
33%
35%
51%
67%
49%
20%
40%
48%
*target allocations as of 10/01/09
40%
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Fixed Portfolios
STOCKS
Equity Portfolio
BONDS
BONDS and INCOME
Balanced Portfolio
MONEY MARKET
Short-Term Bond Portfolio
40%
100%
60%
100%
100%
100%
Total Equity Market Index
Portfolio
100%
100%
Bond and Income Portfolio
U.S. Treasury Money Market
Portfolio
100%
100%
100%
100%
Four Important Notes about Fixed Portfolios:
1. Choose any portfolio you want OR Choose more than 1 portfolio (diversify)
2. You can move funds from one portfolio to another twice during 2009
3. You can select a new portfolio for each new contribution
4. Consider investing in a mix of Enrollment-Based and Fixed Portfolios
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Distributions are Easy
• Complete a Distribution Form – available online
– Indicate how much you wish to take as a distribution
– Indicate to whom you want the check payable
• You are responsible for retaining records to demonstrate whether the funds
were used to pay for eligible college expenses
• There are federal and Maryland tax implications for funds that are not used
for eligible college expenses. Earnings on a distribution not used for
qualified expenses may be subject to income taxes and a 10% federal
penalty
17
Unique Maryland Tax Benefits
•
Prepaid College Trust
Deduct up to $2,500 from your
Maryland adjusted gross income per
account each year:
• $5,000 for two accounts
•
• $7,500 for three accounts, etc.
•
Payments in excess of $2,500 per
account can be carried forward and
deducted in future years until the full
amount has been deducted
College Investment Plan
Deduct up to $2,500 from your
Maryland adjusted gross income per
beneficiary each year
• $5,000 for two beneficiaries
• $7,500 for three beneficiaries, etc.
•
Contributions in excess of $2,500 per
beneficiary can be carried forward and
deducted for up to the next 10 years
* Spouses who open separate accounts for the same beneficiary could qualify for the
Maryland income deduction, whether the couple files taxes jointly or separately
* Although family members can make contributions to your account, encourage them to open
their own accounts to qualify for the Maryland income deduction!
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Additional Tax Benefits
• For Both Plans:
– Investment grows tax-deferred at the State and federal level
– When funds are used for eligible college expenses, earnings are
• Maryland tax-free
• Federally tax-free
19
Compare the Plans – Flexibility and
Affordability
Prepaid College Trust
• Choose from:
–- 1 semester to 5 years at a 4-year
college
–- 1 or 2 years at a Community
College
–- Combination - Two Plus Two Plan
• Three criteria to determine your payment:
– Number of semesters/years
purchased
– Age/Grade of Child
– Payment Plan selected
• Change your tuition plan or payment
option at nearly any time
Maryland College Investment Plan
• Choose from:
– Enrollment-Based or Fixed
Portfolios
– A mix of both
• Minimum investment:
– $250 by check OR
$25 a month through automatic
monthly contributions
• Maximum Investment – up to a total
account balance of $320,000 per child
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What are the steps to enroll for each plan?
• Prepaid College Trust
– Step 1 – Select a Tuition Plan
– Step 2 – Select a Payment Option
– Step 3 – Complete an enrollment form for each child you want to enroll by the
end of the enrollment period
• Maryland College Investment Plan
– Step 1 – Choose one or more investment options
– Step 2 - Choose how much and how often you want to contribute
– Step 3 - Complete an enrollment form for each child – enrollment is open any
time
Please read the entire Enrollment Kit before deciding to enroll
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For More Information
• Web site: www.collegesavingsmd.org
• Key features of Web site:
–
–
–
–
–
–
On-line enrollment – Reduced Enrollment Fee for Prepaid College Trust
Account Access – 24 hours a day, seven days a week
One-time contributions
Video explanation of the plans
Speaker Request Form
Occasional Webinars
• Toll free number: 1-888-4MD-GRAD (1-888-463-4723)
• E-mail: mpct@collegesavingsmd.org
• US Mail: College Savings Plans of Maryland
217 East Redwood Street, Suite 1350
Baltimore, MD 21202
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College Savings Plans of Maryland Board
• Five members serve by virtue of the public office they hold:
Nancy K. Kopp – State Treasurer
Peter Franchot – State Comptroller
Nancy S. Grasmick, Ph.D. – State Superintendent of Public Schools
William E. Kirwan, Ph.D. – Chancellor, University System of Maryland
Dr. James Earl Lyons, Sr. – Secretary of Higher Education
• Five members are appointed by the Governor:
Susan R. Buswell – Retired, Maryland Association of Boards of Education
Gary Dorsch – Allegiance Capital
Helene Grady - Deputy Director of Finance for the City of Baltimore
Thomas H. Price, III – Law Offices of Thomas H. Price, III, P.A.
Lewis A. Robinson – Prince George’s County Educators’ Association
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Additional Features & Benefits
• Maryland Prepaid College Trust
– Newborns can be enrolled any time during the year from the date of their birth
until their first birthday at prices that are in effect when the enrollment is
completed
• Maryland College Investment Plan
– No sales loads, commissions or enrollment fees
– Open an account in anticipation of having a child
– Adults can save for themselves if planning for future higher education
• General Facts
– Plans are an excellent vehicle for investing gifts to children
– Grandparents are a growing enrollment demographic
– Funds in both plans are treated as assets of the account holder in determining
federal financial aid (FAFSA Form)
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Maryland Prepaid College Trust
Maryland College Investment Plan
www.collegesavingsmd.org
1-888-4MD-GRAD
Joan Marshall – Executive Director
443-769-1024