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Fewer Families Saving for College

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It appears that the lingering effects of the recession have hit college savings efforts.   Only half of American families with kids under age 18 are saving for college according to research released by Sallie Mae and Ipsos. That number represents a decline from two years ago.

Sarah Ducich , a senior vice president at Sallie Mae, says families are also saving less, and putting money into more liquid vehicles that don’t earn as much interest.

Ducich says some families also think it’s too early to save for infants, or too late to save for teens for college. But she says if you have a plan, anything you put away can help reduce the amount your student will need to borrow.

Ducich says the plan must consider the total cost of obtaining an undergraduate degree. You can learn more about preparing a college savings plan at Sallie Mae’s website.  You can get information on Pennsylvania’s 529 college savings plans at the state Treasurer’s website.

Solid Year for Pennsylvania’s 529 College Savings Program Despite Uncertain Economy

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Pennsylvania’s 529 College Savings Program had a good year despite the uncertain economy. The Guaranteed Savings Plan had an investment performance of more than 18%, its best year ever. Treasurer Rob McCord says   the program’s investment performance helped boost its actuarial funded status to nearly 98% as of June 30th. It was just 89% last year.

Michael Smith, spokesman for the state Treasurer’s office, says people have until the end of the month to buy credits in the Guaranteed Savings Plan at the current rate. Due to more than average tuition increases at publicly funded colleges and universities, credit rates for that plan will go up on September 1st.

Smith credits sound investment strategies for the performance of the 529 plans.

The Treasury is offering free enrollment for all new 529 GSP accounts opened in August and September.  Smith says that’s a $50 savings.  He says people just need to go on line to http://www.pa529.com and use the term “save 50” when prompted.

In addition to the Guaranteed Savings Plan, the program also has an Investment Plan. The Treasury says families saving in both plans receive tax advantages. The program’s assets totaled $2.347 billion as of June 30th, an increase of 23.6% from the previous year. The total number of accounts increased 5.8% and contributions grew 6% during the year.

Smith says it’s never too early to open at 529 account and start saving for college.  He says for every dollar saved today, that’s one dollar less you have to pay down the road, with interest.

Smith adds it’s also not too late to open an account if you’re already in college or heading to college this fall. He says many students use such accounts to cover a variety of qualified educational expenses.  He says it’s best to log on to http://www.pa529.com and look at both plans to see what works best for them.