In a move designed to help parents and their college-bound children, Converse College is joining with more than 200 private colleges throughout the nation in participating in the Independent 529 Plan. Other participating colleges in S.C. include Charleston Southern University, Columbia College, Furman University, Presbyterian College, and Wofford College.
The plan enables parents to purchase a certificate for part or all of tuition costs at today’s prices which can be later used at any participating college. The certificates can be redeemed years later for the guaranteed amount of tuition-regardless the tuition price at the time the new freshman begins class. The plan is operated by TIAA-CREF Tuition Financing, Inc. and will protect participating families from market risk and federal income tax on any increase in value of the certificates when they are used for tuition. Additionally, participating colleges are required to offer a discount of their current tuition fees to families taking part in the Independent 529 Plan.
“Saving for private college is a great challenge for many families today,” said Nancy O. Gray, president at Converse. “By participating in the Independent 529 Plan, parents save today and save in the future as their college tuition becomes inflation proof. For example, if a parent pre-pays for 50% of a year’s tuition cost at Converse College, that certificate will cover 50% of a year’s tuition at Converse no matter how much tuition may have risen by the time the certificate is redeemed.”
According to Susan Ikerd, vice president for enrollment management at Converse, the family benefits even if the student decides to attend a different participating college than the one originally intended. “Even if the student does not attend Converse, the certificate can be used at another participating college,” she said. “Because tuition prices vary, the certificate amount will be adjusted to fit the institution selected.”
Converse accounts can be opened for as little as $25. Contributions are made on an after-tax basis and any increase in value realized when a tuition certificate is redeemed at a member college will be free of federal and state taxes. Participants may also transfer use of the tuition certificates to a wide range of relatives, including first cousins and in-laws. Unlike many state prepaid tuition programs, Independent 529 Plan has no set enrollment period, and a participant may purchase one or more certificates at any time. A certificate must be held a minimum of 36 months from the first purchase within that program year before it can be redeemed for educational services. A certificate is eligible for refund or rollover to another 529 plan after 12 months.
Currently, the certificates may only be redeemed to cover tuition and mandatory fees. Independent Plan 529 officials hope to eventually extend coverage to include room and board expenses, and graduate school study. If the student receives a financial aid package that will exceed a year’s tuition when coupled with the Independent 529 Plan, the surplus can be rolled over to the next academic year.
Withdrawals that are used for enrollment at non-member colleges, including public institutions, are not subject to federal income tax. If the funds are not used for qualified higher education expenses, however, any increase in