by Kevin Lilly
One thing the tough economy has not negatively affected is college savings and State Treasurer Richard Mourdock wants that trend to continue.
Mourdock said many had speculated people would quit saving for college, but they have done just the opposite. Indiana’s CollegeChoice 529 Savings Plans have experienced a 47 percent rise in participation since the economy’s backwards slide, and they are now leading the nation in college savings plans.
“No other state has shown a double digit increase in growth in the number of accounts since mid-September 2008 when the economy went into the tank,” said Mourdock, who serves on a college savings plan subcommittee for the National Association of State Treasurers.
“We are just outpacing every other state in the country as far as parents and grandparents signing up with college savings plans, and that is a wonderful thing.”
Through CollegeChoice, 165,814 account holders have tucked away nearly $1.2 billion for higher education. To date, 450 families are taking advantage of the program in Cass County.
Accounts take about 15 minutes to set up online and offer steady returns as well as a 20 percent tax credit of up to $1,000 off a contributor’s Indiana state income taxes. And, anyone can contribute, Mourdock said.
Instead of buying the latest video game for birthday or Christmas, grandparents, aunts, uncles and/or family friends can give to the fund and receive a tax credit. The plan is mutually beneficial because it also helps offset the enormous expense of college tuition.
“Higher education is getting increasingly expensive. The average American family cannot begin to suddenly write that check the day that college enrollment shows up unless they’ve done a lot of planning in advance,” Mourdock said.
The state treasurer pointed out that cost of higher education is increasing faster than the rate of inflation.
“It’s almost out of control,” he said.
For a newborn today, the cost of attending a four-year state school in 18 years will cost about $180,000.
“The average family cannot put that money away unless they are really working at it,” said Mourdock, who wants to discourage the attitude from some parents that say there is no way they could save that much so why even try.
“It’s much easier to save money than it is to borrow,” Mourdock said. “It’s better to earn interest than pay interest.”
The most popular savings plan option is CollegeChoice Direct, which allows people to set up the account on their own. Another feature automatically selects the investment portfolio based on the child’s age at the time the account is set up. The investments are riskier the younger the child but become more conservative as child gets closer to enrolling in college.
“Each year it will keep self-adjusting, so there is less and less risk,” Mourdock said.
This year, CollegeChoice executive director Jodi Golden is focusing on employers setting up automatic payroll deduction for the savings plans. She said establishing the process is simple and costs the company nothing.
“We continue to visit and encourage employers across the state, whether they have two employees or 2000 employees, to offer this free benefit as part of their existing benefits package,” Golden said.
Golden believes offering the deduction shows employees their company care about the welfare of their employees’ families and their future education expenses.
Any employer wanting to get this set up or employee who wants to encourage the company they work for to set up the deduction can go to www.indianas529.com or call 317-232-5259. Currently, there are about 225 employers participating in the program.
• Kevin Lilly is news editor of the Pharos-Tribune. He can be reached at 574-732-5117 or firstname.lastname@example.org.