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Fund allows paying for college at current rate

March 10, 2005|by KAREN HANNA

College tuition projections for today's infants and toddlers range in the six figures, but parents can control some of those costs by saving today.

The Maryland Prepaid College Trust gives parents the opportunity to pay for tomorrow's college studies at today's tuition rates. Enrollment in the state-backed plan ends this year on March 18. After that, costs go up again.

The College Savings Plans of Maryland, a state agency that offers college-tuition payment plans, estimates four-year tuition costs at public colleges will double in the next decade or two - the average cost next year is projected to be $7,455 - and climb to six figures between 2022 and 2025.

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Executive Director Joan Marshall said parents who enroll by March 18 can lock in the current costs for their children's future schooling.

At regular payments ranging from $177 a month to $697 a month, the plans available to cover a first-grader's four years of classes at a Maryland public university are not cheap, but, Marshall said, "it still is less than what it would cost when that child goes to college."

The college trust, which is backed by a Maryland General Assembly guarantee, is an investment plan through which parents and students can make early tuition payments at today's weighted average rates of Maryland public colleges. The investment, which is tax deductible, pays out the weighted average public-school tuition at the time students attend college. That return is tax deferred and transferable to both in-state and out-of-state schools, Marshall said.

Costs are determined by a student's age and his or her anticipated course of studies - there are payment plans for semesters and years, lump sums and down payments, two-year colleges and four-year universities.

Marshall said the college trust is funded by parents' investments, although the state has agreed to pay any potential shortfall between their investments and the eventual cost of in-state public-school tuition.

Marshall said 22,000 students are enrolled in the trust, which so far encompasses the investment of about $325 million.

College Savings Plans of Maryland also offers a number of enrollment-based portfolios for students, ages infant and older. The college trust plan enrollment deadline applies to students, ages 1 and older - there is no deadline for parents of infants - and the first payment is due Aug. 1.

Marshall said that by enrolling now, parents can avoid huge tuition increases. The cost to enroll in the plan increased 10 percent from last year to this year, and by about 25 percent a year for two years before that, she said.

The inevitability of future increases should help ease some of the sticker shock prospective investors might feel when they consider locking in tomorrow's tuition at today's prices.

"Even if these prices may look high, it's still far less, particularly for a young child, than if that family waits 'til that child enrolls in college," Marshall said.

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