Tuition program tries to survive

Prepaid College Trust officials aim to inform potential participants

June 03, 1999|By Michael Hill | Michael Hill,SUN STAFF

At the downtown Baltimore offices of the Maryland Prepaid College Trust, the atmosphere feels like a campaign headquarters a week before Election Day.

"I think we have done everything we can to get the word out," said Joan Marshall, the program's executive director. "Now it is up to the people of Maryland to decide if this is what they want to do."

The state-sponsored college savings program that allows parents of youngsters to pay state school costs essentially at today's prices -- a hedge against a rise in tuition and fees -- is still looking for the 10,000 participants it needs to be a self-sustaining enterprise.

It got off to a rocky start last year, when about 1,000 people signed up. Another 1,000 have signed up in the current enrollment period, which began in February and ends next week, and program officials remain optimistic.

"All of the experience we have learned from other states is that most of the applications come in during the last week," said Marshall. "That's what we're expecting here."

Marshall and her staff have attended dozens of meetings in every county of the state since the current enrollment period opened Feb. 10, explaining the program and clearing up misconceptions.

In the process, they handed out all 50,000 copies of the booklet about the program that were printed. Another 10,000 were ordered. The sign-up closes June 10.

"I think we will get several thousand sign-ups in the next week," said Edwin S. Crawford, chairman of the program and a member of the Board of Regents of the University System of Maryland.

"Between that and the sign-up period in the fall, we should get up to around 9,000 or 10,000, which is where we told the General Assembly we would be," he said.

The program was passed by the General Assembly last year on the assumption that it would get enough participants to pay its own way, earning sufficient money by investing the funds it collects to pay out benefits as well as its administrative costs.

But when only 1,000 signed up last year, the General Assembly agreed to subsidize the program's $1.5 million costs this year. If it fails to sign up enough participants, Crawford would have to go looking for another subsidy next year and might not get it.

"The worst-case scenario, if they shut the program down, is that we close off new enrollments, invest the money of all the participants we have and give them their payout," Crawford said. "But that's not going to happen."

Crawford seemed puzzled that money has not poured in as it has for nearly identical programs in Florida, Virginia, Ohio, Pennsylvania and several other states.

"For some reason, people in Maryland are just more skeptical," he said.

Crawford is also disappointed that more members of the General Assembly have not joined the program, noting that the majority of Virginia legislature members with children signed up for that state's prepaid plan, but only a handful have in Maryland.

For the past week, the program's staff have planned a "whistle-stop tour" of the state. They will be at the HEAT Center in Aberdeen this afternoon and evening from 4 p.m. to 8 p.m. and close with two other days in the Baltimore area, in the Howard County office building lobby in Ellicott City Wednesday and at Towson University June 10.

Chat sessions on the program's Web site,, and extended hours for the toll-free phone, 888-4MD-GRAD, are also scheduled.

The program allows payments in anything from a lump sum of about $17,000, depending on the age of the child, to monthly payments extending until the child starts college.

Plans can be based on costs for two years at a community college and up to four years at a university.

Marshall said the most common misconception about the program is that it must be used at a state school. Though the program will fund tuition and fees at any state school, it will pay an equal amount of money for those costs at any school, in Maryland or any other state.

Marshall also emphasized the additional tax benefits added by the General Assembly this year. Participants can deduct up to $2,500 per child per year from their state income when figuring state income tax for as many years as it takes to equal the full amount of their investment.

Maryland Prepaid College Trust

Total cost of payment options for four-year university plan

Lump sum Annual 5-year Extended Estimated

monthly monthly college cost

Infant $16,777 $21,328 $20,160 $30,745 $66,121

2nd-grader $17,277 $22,689 $20,760 $25,414 $41,025

7th-grader $17,846 $21,234 $21,420 $22,152 $29,508

SOURCE: Maryland Prepaid College Trust

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