State extends the deadline for prepaid tuition program Sign-up date now July 30 for college savings plan

June 30, 1998|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

If you haven't signed up for Maryland's new prepaid college tuition program, there's still time. The initial enrollment deadline, which had been today, has been extended to July 30.

Acknowledging that the state-sponsored college savings plan has gotten off to a slow start, directors of the prepaid tuition trust decided late last week to postpone the sign-up cutoff date.

"We're still just trying to get the word out," said Edwin S. Crawford, chairman of the trust.

Trust officials say that while they have fielded more than 20,000 inquiries, only about 1,000 applications have been submitted.

Though a similar college savings plan in Virginia drew 16,000 applications in its first year, Maryland trust officials say they are not discouraged. They said they expect a surge in applications this week because of the initial sign-up deadline.

"We're not unpleased, but I think we've got a lot of work to do," said Crawford, who is an investment banker and a member of the University System of Maryland Board of Regents.

Under the program, parents planning to send a child to community or four-year college can sign a contract agreeing to pay tuition and fees at current rates, in a lump sum or in monthly installments. Though there is no guarantee, the payments are invested by the trust with the intent of earning enough interest to cover any future increases in college costs.

Payments intended to cover four years of college can vary from $131 a month for 216 months for an infant, to $17,289 in a lump sum for a 10th-grader.

Trust officials blamed the slow sign-up pace on the trust's lack of name recognition.

"A lot of people thought we were an investment bank," said Crawford.

The program has spent more than $300,000 on advertising and marketing, said Doug Neilson, the trust's executive director. But the publicity blitz came just as the school year was ending in some parts of the state, cutting off a chance to promote the program through public school officials.

Efforts to publicize the program will continue through next fall, in advance of the next annual sign-up "window" early in 1999, Neilson said. But the cost of the trust next year will be higher, he noted, reflecting the annual increase in college costs.

Neilson said the plan does not rely on a large pool of applicants to pay for college costs. "Whether there's 1,000 people in the program or 100,000, it still works," he said. "The earnings we're striving to make are not governed by the number of people in the program."

Parents who manage their investments carefully probably can earn more than the 7.5 percent return sought by the savings plan, officials said. But the trust also offers families tax breaks, which officials hope will be expanded by the General Assembly next year.

A family can deduct up to $2,500 of payments into the trust from state income taxes, and the interest earned is state-tax exempt. Neilson said legislators likely will be asked to increase the deduction to $2,500 per child.

Pub Date: 6/30/98

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