Maryland Prepaid College Trust Maryland College Investment Plan MD-GRAD

Transcription

1 Maryland Prepaid College Trust Maryland College Investment Plan MD-GRAD

2 All the Information I. College Savings Plans of Maryland Overview II. Eligibility III. Maryland Prepaid College Trust a. Benefits What Does the Plan Pay For? b. Affordable Tuition Plans and Payment Options c. Flexibility Features d. Refunds e. Enrollment and Actuarial Status IV. Maryland College Investment Plan a. Investment Options b. Distributions V. Tax Benefits VI. Plan Comparison VII. College Savings Plans of Maryland Board VIII. Additional Features & Benefits 2

3 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

4 Who Can Enroll? Maryland Prepaid College Trust Open to 12 th graders or younger, including newborns Either the account holder or child must reside in Maryland or DC at the time of enrollment 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

5 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 5

6 Maryland 4-Year Public College Costs (UNDERGRADUATE IN-STATE TUITION & MANDATORY FEES ONLY) St. Mary s College of Maryland $13,234 University of Maryland, Baltimore County $8,872 University of Maryland, College Park $8,053 Weighted Average Tuition $8,016* Towson University $7,418 University of Baltimore $7,171 Frostburg State University $6,684 Salisbury University $6,618 Morgan State University $6,548 University of Maryland Eastern Shore $6,082 Bowie State University $6,040 Coppin State University $5,276 *Tuition benefits are paid per semester A beneficiary attending a private or out-of-state college for the Academic Year receives up to $4,008 per semester or the Minimum Benefit - whichever is greater. 6

7 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 4- year 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

8 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

9 4 Year University Contract Costs vs. Projected Weighted Average Tuition $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 Lump Sum Annual $49,166 8th Grade 4th Grade Kindergarten Infant Projected Weighted Average Tuition $66,531 $90,260 5-Year Monthly Extended Monthly $132,655 9

10 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

11 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 11

12 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 12

13 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

14 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. 14

15 Enrollment Based Portfolios STOCKS BONDS BONDS and INCOME CONSERVATIVE FIXED-INCOME natural progression of portfolio asset reallocation Portfolio 2030 Portfolio 2027 Portfolio 2024 Portfolio % 17% 100% 100% 98% 83% Portfolio 2018 Portfolio 2015 Portfolio 2012 Portfolio for College 33% 67% 49% 51% 17% 48% 35% 40% 20% 40% *target allocations as of 10/01/09 15

16 Fixed Portfolios STOCKS BONDS BONDS and INCOME MONEY MARKET Equity Portfolio Balanced Portfolio Short-Term Bond Portfolio 40% 100% 60% 100% 100% 100% Total Equity Market Index Portfolio Bond and Income Portfolio U.S. Treasury Money Market Portfolio 100% 100% 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 You can select a new portfolio for each new contribution 4. Consider investing in a mix of Enrollment-Based and Fixed Portfolios 16

17 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

18 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! 18

19 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

20 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 20

21 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 21

22 For More Information Web site: 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: MD-GRAD ( ) mpct@collegesavingsmd.org US Mail: College Savings Plans of Maryland 217 East Redwood Street, Suite 1350 Baltimore, MD

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24 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 24

25 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) 25

26 Maryland Prepaid College Trust Maryland College Investment Plan MD-GRAD Joan Marshall Executive Director