Md. College Savings Plan Can Lock-in Future Tuition at Today's Price

BALTIMORE - The College Savings Plans of Maryland (CSPM) today announced that the Maryland Prepaid College Trust (MPCT) has opened its 2006 - 2007 enrollment period, which will continue through March 31, 2007. The MPCT is one of two Section 529 plans offered by the CSPM that give families an opportunity to lock in tomorrow's tuition at today's prices and is backed by the security of a Maryland Legislative Guarantee. Prices for the University and Community College Plans within the MPCT are the same as last year's prices.

The CSPM, an independent State Agency, also administers another tax-advantaged 529 plan - the Maryland College Investment Plan (MCIP), managed and distributed by T. Rowe Price. The MCIP offers a choice of 13 investment options, with no sales commissions or loads, and enrollment is open year-round. Both plans offer generous federal and Maryland State tax benefits and can be used at nearly any accredited college in the country.

Key developments over the past year include:

o The Federal Tax Exemption for earnings from Section 529 College Savings Plans is now permanent - New federal tax legislation signed into law through the Pension Protection Act in August of 2006 now makes earnings from investments in Section 529 College Savings Plans permanently federally tax- free when funds are used for eligible college expenses.

o No increase in Prepaid College Trust Prices from the 2005 - 2006 enrollment period.

o Financial Aid Treatment for the MPCT is now the same as for the MCIP: Provisions included in the Higher Education Reconciliation Act that became effective on July 1, 2006 now treat both MPCT and MCIP accounts as parental assets as long as the parent is the account holder.

o MCIP significantly reduces fees: Effective July 1, 2006, fee reductions and portfolio enhancements went into effect which eliminated the $75 enrollment fee in this Plan, reduced the Annual Account Fee and lowered the Program Fee. In addition, two new portfolios were introduced in the Plan.

"We are very pleased to be able to hold prices steady in the Prepaid College Trust for our 9th enrollment period, which extends until March 31, 2007," said Joan Marshall, Executive Director of the CSPM. "In the past year, we have seen significant additional investments in both Plans, with total assets now exceeding $1.5 billion as of September 30, 2006. The Prepaid College Trust also built an actuarial surplus of $16 million as of June 30, 2006 and paid more than $11 million in tuition benefits during the past fiscal year for participating students who are attending colleges in Maryland and across the country."

Other key features of the Plans include:

o Tax benefits: CSPM offers the only 529 plans that provide a State income deduction for Maryland taxpayers (up to $2,500 per account or beneficiary, depending on the plan). Earnings are also tax-free when used toward eligible college costs.

o Save here, study anywhere: The Prepaid College Trust will pay full in-state tuition and mandatory fees at any Maryland public college or university when enrolled children reach college age. Tuition benefits may also be applied to nearly all other colleges and universities, public or private, around the nation.

o Sign up now, pay later: Prepaid College Trust payments do not start until August 1, 2007, offering families the opportunity to save money - or even use 2006 tax refunds - between enrollment and the first payment date.

o Flexibility: For the third year, the Prepaid College Trust is open to tenth through twelfth-graders. Enrolled students may begin to use their account benefits after three years of investment maturity. In addition, down-payment options are available for 25 percent, 40 percent and 55 percent of the lump sum, with the remainder paid monthly or annually. Convenient annual payments are also available.

o One-Semester Plans: It's easier than ever for grandparents and others to join forces with parents to make college possible for their loved ones by purchasing as little as one semester, possibly as a gift, which could be a smart alternative to savings bonds.

o Online enrollment: Online enrollment makes signing up fast, easy and convenient. Complete information is available on CSPM's Web site (

Source: College Savings Plans of Maryland

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