State Treasurer Rob McCord is urging parents to open a Pennsylvania 529 Guaranteed Savings Plan (GSP) before Sept. 1 to take advantage of last year’s lower cost per college credit.
529 plans are offered by states that include tax-free earnings growth and withdrawals.
According to a 2010 survey by the Pennsylvania Treasury that sampled 257 parents with a child under 12, all parents said their child is either likely or very likely to attend some form of higher education, but only 25 percent had started saving for college. But nearly 75 percent of parents who put money away started saving when their child was younger than 3 years old.
At the start of next month, cost per college credit will rise with tuition increases set by colleges and universities.
Pennsylvania Treasurer Rob McCord said the program offers more benefits than a personal savings account.
“The main thing that 529 plans do in general is give very big tax advantages to families that save in advance for college, whether it’s a little or a lot,” he said.
As an additional incentive, the treasury is also offering free enrollment for all PA 529 GSP accounts opened by Aug. 31. Those interested in opening an account online should enter the code “SAVE” when prompted.
As of Oct. 1, the state will reduce maintenance fees by 0.35 percent for account owners who receive statements by email and a 10 percent reduction for those who use mail.
McCord said people should be careful when using this type of plan and shouldn’t handle it as just another bank account.
“You don’t want to be treating this as just another asset and pulling the money out willy-nilly,” he said. “You really want to earmark it for one of the most valuable investments you could ever make, an investment in higher education for yourself or for a loved one.”
In the 2012-13 fiscal year, Pennsylvania families put more than $182 million towards the PA 529 GSP. As of June 30, the fund was worth $1.5 billion, a 7.7 percent increase from the previous year.