Hope College is a founding member of "Independent 529 Plan," a new national prepaid college tuition plan tailored specifically for private colleges.
More than 220 private colleges and universities from 37 states and the District of Columbia are currently participants in the plan, with more anticipated. Hope joined to provide a strong, additional option for families seeking to finance a Hope education.
"We are as concerned about the increasing cost of higher education as many others, and we are always looking for ways to make a Hope College education more affordable," said Barry Werkman, vice president for finance at Hope. "We think that this is a great plan for families interested in locking in future tuition at today's rates."
Section 529 Plans are named for the IRS code that defines them. Accounts generate no federal income tax if used as intended, benefits are transferable to other members of the family, and refunds are available if the child receives a scholarship or decides not to attend college.
For purchasers, the effectiveness of "Independent 529 Plan" is not dependent on the performance of the stock or bond markets. Rather, contributions are actually pre-purchasing tuition at any of the participating schools.
"'Independent 529 Plan' proceeds can be used at any of the participating colleges. Think of it as buying a shopping certificate for use at any of the stores at a mall," said Doug Brown, president and CEO of Tuition Plan Consortium, the Albuquerque, N.M.-based nonprofit group that oversees the plan. "Students don't choose their college at purchase, but after they have applied and are accepted in the regular manner." The purchase of a tuition certificate does not guarantee admission or enrollment at a participating institution, and may have an adverse effect on the beneficiary's eligibility for financial aid.
The certificates will cover in the future the same percentage of cost that they would cover at the time of purchase. For example, $10,000 in certificates would cover all of the cost of a college that currently charges $10,000 in tuition, and one third of the cost of a college currently charging $30,000. At whatever point the student would decide to use the certificates, no matter how high tuition may be at the time, they would still cover all and one third respectively of tuition at the two schools.
Among other features, there are no fees for participating in the plan. Any parent, other relative or friend may establish an account for an eventual student, and the certificates may be transferred to a wide range of relatives of the beneficiary. Accounts can be opened for as little as $25, providing that contributions total at least $500 within two years.
Tuition Plan Consortium was formed in 1996 to make education at independent colleges and universities more affordable and more accessible for families in the United States. TIAA-CREF Tuition Financing Inc. will administer the plan and TIAA-CREF Trust Company FSB will manage the investments.
Participating institutions include a range of colleges and universities, from Harvey Mudd College in California, to Chaminade University of Honolulu, Hawaii, to the University of Notre Dame in Indiana, to Princeton University in New Jersey.
In addition to Hope, the Michigan schools participating are Albion and Kalamazoo. Other Great Lakes Colleges Association (GLCA) schools participating along with Albion, Hope and Kalamazoo are Denison University, DePauw University, Earlham College, Kenyon College, Oberlin College, Ohio Wesleyan University and The College of Wooster.
More information about the plan, including a complete list of participating schools, may be obtained online at www.independent529plan.org or by calling 1-888-718-7878.