The College Savings Plans of Maryland announces portfolio enhancements and significant fee reductions to the Maryland College Investment Plan, effective July 1st, 2006. Plan assets top $1 billion.
The College Savings Plans of Maryland (CSPM) on July 1st announced significant fee reductions and portfolio enhancements to the Maryland College Investment Plan, to take effect in conjunction with the start of the Plan’s July 1, 2006 contract with T. Rowe Price. Since the launch of the Maryland College Investment Plan in 2001, invested assets have risen past the $1 billion mark and the number of account holders now stands at over 45,000, representing over 60,000 beneficiaries.
Through a competitive bidding process in 2005, T. Rowe Price was awarded the contract to continue managing the Maryland College Investment Plan. Effective July 1, 2006, the following fee reductions and portfolio enhancements will take effect:
• Elimination of the current $75 Enrollment Fee for the College Investment Plan.
• A reduction of the Program Fee charged on assets invested in the Plan – down from a maximum of .38% to .28%. This Program Fee will be further reduced to .25% for all participants when total assets in the plan exceed $2 billion. This means that the maximum total operating expenses charged to participants in the College Investment Plan, which includes the Program Fee and the operating expenses of the underlying mutual funds, will be reduced from 1.05% to .95%.
• A reduction of the Annual Account Fee – from $30 to $25. This fee continues to be waived for participants who contribute on an automatic monthly basis or who have at least a $25,000 balance for a single beneficiary.
• The introduction of a low-cost equity index portfolio, the Total Equity Market Index Portfolio.
• The introduction of Portfolio 2027, a new portfolio that follows the natural evolution process of the Enrollment-Based Portfolios since Portfolio 2006 has been converted into the Portfolio for College.
Based on the projected cost of a $10,000 investment over 10 years, these extensive fee reductions would result in an average savings of an additional $200 - $300, helping investors to potentially accumulate more money for future college expenses.
Treasurer Nancy Kopp, College Savings Plans of Maryland Board Chair, commented, “As the Maryland College Investment Plan continues to evolve, we repeatedly seek ways to keep our fees low, offering the highest value to our participants and helping families save for college. The reduction in fees as of July 1, 2006 ranks the Plan among the lowest cost direct-marketed in-state 529 College Investment Plans.”
“Reaching the $1 billion in assets mark is an important milestone for the Maryland College Investment Plan,” said Ed Bernard, Chairman, T. Rowe Price Investment Services, Inc. “With this new contract and associated fee reductions, we remain committed to providing a strong and competitive Plan that offers Maryland families a great way to save for their children’s college education.”
The Maryland College Investment Plan will now provide participants a choice of 13 investment portfolios, with no sales commissions or loads. Participants may choose to invest in “Enrollment-Based” portfolios, which are automatically adjusted over time to become more conservatively invested as a child reaches college age, or “Fixed” portfolios which contain asset allocations that remain constant over time. Enrollment in the Plan is open year-round.
The CSPM, an independent Maryland State agency, also administers another tax-advantaged 529 college savings plan, the Maryland Prepaid College Trust, which allows families the opportunity to lock-in tomorrow’s tuition at today’s prices. The Trust is likely to open to new enrollment sometime in mid to late November, 2006. Investments for both the Maryland College Investment Plan and the Maryland Prepaid College Trust total nearly $1.4 billion.
Enrolling in the College Savings Plans of Maryland is an important decision. CSPM urges potential participants to read the entire Enrollment Kit carefully before deciding to invest. The Enrollment Kit discusses investment objectives, risks, fees, charges and expenses, and other important information and may be accessed on-line at http://www.collegesavingsmd.org or by calling 1-888-4MD-GRAD. Those who live outside Maryland should consider any college savings program offered by their home state or their Beneficiary’s home state prior to making a decision to invest in the College Savings Plans of Maryland.