Boergers unveils savings plan to be used for college tuition CAMPAIGN 1994 -- THE RACE FOR GOVERNOR

August 01, 1994|By Robert Timberg | Robert Timberg,Sun Staff Writer

State Sen. Mary H. Boergers, a Democratic candidate for governor, has unveiled a two-pronged program to encourage so-called working families to save for their children's future college costs and reward those who pick a school in Maryland.

Ms. Boergers, at recent newa conferences at Towson State and Bowie State universities, said she wants to re-activate the Maryland Minibond Plan as an investment vehicle for parents hoping to offset spiraling higher-education costs.

The plan, in limbo since 1991, permits individuals to purchase tax-exempt state bonds in denominations as low as $500 rather than the usual $5,000 minimum. The interest on such bonds, similar to zero coupon bonds, would be exempt from federal, state and local piggyback income taxes.

There would be a small reward for families of students who attend either public or private colleges in Maryland -- a half-of-one-percent bonus on the face amount of the bond, Ms. Boergers said. For a $1,000 bond, the incentive would mean only to the purchaser at maturity, but the Boergers proposal envisions the accrual of bonds over several years totaling much more.

In addition, Ms. Boergers proposed the establishment of a tuition savings plan, which would permit parents to invest up to $2,000 per child per year of their pre-tax income in any one of a number of eligible investment plans.

If the child eventually attends a Maryland college, the principle and interest would be fully exempt from state income taxes. If the child goes to school elsewhere, state taxes would have to be paid when funds are withdrawn. Under the Boergers plan, parents whose children attend a Maryland school would not have income attributable to minibonds or tuition savings counted against them when and if they apply for state financial aid.

Ms. Boergers said she could not predict how much the tuition savings plan would cost the state in lost or deferred tax dollars.

A similar proposal died in the House of Delegates in 1990. At that time, state fiscal analysts, expressing uncertainty about the level of participation, said the program could cost the state $2.6 million annually if 10 percent of Maryland households set aside the maximum $2,000.

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