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College: Maryland investment plans attempt to make higher education more affordable.

December 06, 2001

FIRST, a few numbers.$80,000. $200,000.

If you have a child who just started kindergarten this fall, those figures will look familiar to you in about 12 years. It's what your child's college tuition, fees and other expenses will cost, respectively, at a public and private institution.

Here's another number: 529. Learn this one, too. Embrace it. Rejoice in it.

That's the tax identification number of the special investment account you'll need to help pay those eye-popping costs. And because you live in Maryland, you have an increasing number of ways to take advantage of these accounts.

Already, 10,000 families participate in the Prepaid College Trust, which allows them to lock in future tuition costs at Maryland public colleges at today's levels.

Now another program, called the Maryland College Investment Plan, will complement it.

The plan, which will be managed by Baltimore-based T. Rowe Price Associates, will offer 10 different investment options.

Families can start accounts at any time, and the earnings won't be taxed (by the state or federal government) if they're used for college costs. In addition, the new plan, like the Prepaid College Trust, allows participating families to deduct up to $2,500 of their contributions to the account each year on their state taxes.

The tax benefits alone make the plan a better deal than any nonexempt account. And if families start early enough, they'll likely only need to contribute a few thousand dollars a year to fully pay for their child's education.

Of course, a more encouraging development would be a more aggressive state effort to keep public college tuition affordable. (Regents approved yet another 4 percent tuition hike at most University of Maryland campuses this year.) And if anyone finds a way to control private school costs (which now average about $30,000 a year) it will truly be cause for celebration.

Short of that, Maryland's 529 plans are a sensible way to deal with the much bigger numbers associated with college costs.

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