Pennsylvania families last year displayed a remarkable commitment to saving for their children’s future, Treasurer Rob McCord reported today as he chaired the quarterly Tuition Account Program Advisory Board meeting. More than $422.3 million was invested in the Pennsylvania 529 College Savings Program in 2013, an 11 percent increase from 2012, and the number of open accounts grew by 5.23 percent.
“With no proposed increase in next year’s state budget for funding to state-supported colleges and universities, tuition will likely – once again – rise for many of Pennsylvania’s publicly funded schools,” McCord said. “While few families are able to save for the entire cost of their child’s higher education, I’m glad to see that families are so committed to saving what they can, as every dollar saved is one less that needs to be paid back with interest.”
As of December 31, 2013, the PA 529 had a record-breaking 186,172 open accounts and families invested more than $422.3 million in the program, which exceeds contributions made in 2012 by about 11 percent.
The PA 529 Program provides two ways to save: the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). The primary difference between the two plans is the way savings grow.
Growth in the PA 529 GSP is based on tuition inflation. For example, someone who saves enough for a semester at one of Pennsylvania’s State System of Higher Education universities today will have enough for a semester there in the future – no matter when or how much tuition has gone up in the meantime. The number of open accounts increased by close to 2 percent compared to 2012, and contributions were up 2.7 percent.
Returns in the PA 529 IP are based on financial market performance. The PA 529 IP features low fees and more than a dozen conservative and aggressive investment options from Vanguard, one of the nation’s largest financial services companies. The number of open accounts increased by nearly 10 percent compared to 2012, and contributions were up nearly 18 percent.
The amount the program has paid out for students’ college expenses also increased by nearly 8 percent since 2012. Since the program’s inception, more than 70,000 students have used their accounts to attend more than 2,000 schools. Nearly $1.8 billion has been paid on their behalf, of which nearly $500 million has been gains on their contributions.
Also notable in 2013, Treasurer McCord lowered fees by up to 30 percent for the PA 529 GSP and 22 percent for the PA 529 IP, which represents a 44 percent reduction in fees since he took office in 2009. As a result of these reductions, PA 529 account owners are projected to save $3.7 million in 2014, and more than $40.5 million through 2018.
“According to the most recent Project on Student Debt study issued in December, Pennsylvania students graduate with the third highest level of debt in the country,” McCord said. “Since taking office, we have increased the number of families saving and the amount they are saving for higher education year after year, but clearly we need to continue spreading the word about the benefits of saving versus borrowing.
“Some form of higher education has become an economic necessity. I understand budgets are tight for many families, but even small contributions to a PA 529 account will help you meet the growing costs of higher education,” he added.
Visit www.PA529.com or call 1-800-440-4000 to contribute to or open a PA 529 account.