SPRINGFIELD, Ill.— When Cindy Wisniewski found out she was pregnant with twins, her husband’s first thought was "How are we going to afford college for them?" Cindy's answer gave him comfort. "The same way we paid for the other three, with the College Illinois!® Prepaid Tuition Program. "
The Wisniewski family, of Naperville Ill., are among a growing number of parents turning to the College Illinois! Prepaid Tuition Program to limit the effects of tuition inflation on their family’s wallet. According to the College Board, today’s newborn is expected to pay $180,000 to attend a four-year, public university. In the last decade alone, the cost of college tuition at four-year public universities has more than quadrupled.
“You have enough to worry about with five kids, and [with College Illinois!] we were able to put away money today knowing that tomorrow, they will have the opportunity to receive a college education,” said Wisniewski. “We love being able to give them this unique opportunity to build their future.”
Administered by the Illinois Student Assistance Commission, the College Illinois! Prepaid Tuition Program is a state-sponsored plan that allows purchasers to lock in the cost of tuition and mandatory fees for a future student today. When a beneficiary is ready to go to college, he or she can apply benefits almost anywhere according to the terms of the contract.
“With our program, parents and grandparents are encouraged to start saving early. The younger the child, the greater opportunity for savings on college tuition and mandatory fees,” said Andrew Davis, executive director of the Illinois Student Assistance Commission. “In fact, many of our contract holders have mentioned purchasing a contract for their newborn shortly after birth.”
Eric McKissack, chief executive officer of Channing Capital Management in Chicago, agrees. He said the key to investing in education is to start early and use tax-advantaged vehicles like 529 plans that are tax deductible and grow tax free.
“With costs soaring the way they are, everyone should make saving for college a priority today,” McKissack said.
Since every family’s situation is different, College Illinois! offers many flexible plans and affordable payment options that make it easy to start early and save for college over time while also saving money on college. Three distinct plans (Community, University, University +) let purchasers start out small by paying for a semester or year of school, with the option to add on later. Purchasers can choose to pay over time or in a lump sum on a schedule that best fits their needs. However, the deadline for program payments to qualify for 2010 tax year benefits is December 31, 2010, and prices will increase with the new year.
“College Illinois! lets us save for college for our kids over time in a way that makes sense financially for us,” Wisniewski said. “Signing up for the program was one of the best decisions my husband and I have made for our children.”
The Wisniewskis are not alone. To date, more than 27,000 families have purchased more than 68,000 prepaid tuition contracts, utilizing benefits at approximately 800 schools.
Plan earnings are exempt from state and federal taxes when used for qualified education expenses. Contributions made towards a contract before December 31 can be claimed on 2010 state tax returns. Illinois taxpayers can deduct contributions up to $10,000 per individual or $20,000 for married couples filing jointly. For those who purchase a plan as a holiday gift for their child or grandchild, there is a gift-giving tax exemption of up to $13,000 for individuals or $26,000 per couple.
To give a prepaid tuition contract to a child for the holidays, Davis – a contract holder himself – suggests combining it with another gift such as a piggy bank to help gain a better understanding of money.
“A children’s book such as The Penny Pot would be an appropriate gift for young readers,” said Davis. “For older children, Money Sense for Kids might be a good choice.”
The holiday season is the perfect time to give the gift of education to a child or grandchild because it’s a gift that truly lasts a lifetime. Visit www.529prepaidtuition.org/gift or call toll-free at (877) 877-3724 for program information, monthly pricing discounts and enrollment guidelines. Prices adjust January 1, 2011, so it pays to purchase sooner rather than later.
Administered by the Illinois Student Assistance Commission, the College Illinois! Prepaid Tuition Program is a secure college funding option because benefits do not fluctuate with the stock market. Since the program’s inception in 1998, more than 68,000 prepaid tuition contracts with a value of more than $1.6 billion have been purchased. ISAC’s commissioners are responsible for the overall management of the program and its investments, including hiring a qualified slate of investment managers and other professionals.