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FOR IMMEDIATE RELEASE
September 22, 1997
Contact: Amy Hanna
Borshoff Johnson & Co.
Saving for higher education just got easier...
Introducing the Indiana Family College Savings Plan
Indianapolis - Most parents are overwhelmed when they look 15 years ahead to the cost of their child’s college education. With the price of education rising twice the annual inflation rate, the projected bill for tuition, room, board and expenses at a four-year public college will top $165,000. For an Ivy League education, the price tag jumps to over $431,000. (Money, September 1996).
But now, Indiana parents can get a head start preparing for higher education costs with the help of the Indiana Family College Savings Plan - a leader in flexible, cost-effective college savings plans. The Plan was introduced by Governor Frank O’Bannon and other officials at a special news conference today in Indianapolis.
"Education is an extremely critical component among the factors that can provide a vibrant Indiana economy," O’Bannon said. "Not only is it key in attracting business and industry to the state, it also impacts the earnings power and quality of life of our citizens."
He cited Census Bureau statistics that show the average annual income of a family with college degrees of $73,000, while a family without degrees earns only $49,000 annually. The Governor also called on Indiana employers to make payroll deduction contributions available to Indiana workers.
The Indiana General Assembly created the Indiana Family College Savings Plan to help those who want to save money for a child’s higher education.
State Treasurer Joyce Brinkman emphasized the importance of establishing a savings discipline. "The most important thing parents can do to ensure educational opportunities for their child is to begin saving early in the child’s life. A contribution of as little as $25 a month allows parents to participate in the Plan when the child is an infant, and the earnings on those contributions continue to compound the entire life of the Plan."
She quoted a national survey conducted by Sallie Mae, indicating only 15 percent of families begin college savings before their child enters high school.
An important advantage to the Family College Savings Plan is that income taxes on earnings are deferred until withdrawals are made for eligible higher education expenses. At that time, the tax consequences apply to the student, who has a lower tax rate than adults.
"One of the flexible features of the Indiana plan is that the dollars can be used at public or private colleges, in Indiana or out of state, " said Stan Jones, Commissioner for Higher Education. "We wanted to remove the concern parents have when the child is young about not knowing where the child would attend college."
Jones also discussed the methods of contributing to the plan, which include payroll deduction, automatic deduction from bank accounts, and coupons.
Funds in the account are invested in the Pegasus Managed Assets Balanced Fund, a balanced mutual fund managed by an affiliate of NBD Bank, the plan administrator. The Federal Act enabling state plans requires that the Plan make all investment decisions on behalf of participants. Account owners will receive quarterly statements showing contributions, earnings, and the account balance.
The flexibility of the Indiana Plan also was cheered by Andrew Paine, Jr., president of NBD Bank in Indiana. "In building the system to administer Indiana’s plan, we studied those in other states and realized how the Indiana design is truly better. Hoosiers should be proud of the excellent features their state officials have created in the Indiana plan."
An account can be opened to benefit a child as soon as the child has a Social Security number. However, accounts also can be opened to benefit adults who wish to further their higher education or want to change careers. Family members and others may contribute to the account using coupons.
The higher education community is pleased about the introduction of the Plan, according to Indiana University President Dr. Myles Brand. "It is especially fitting that the torch on our state flag has been selected as the symbol for this outstanding new program. Light is often a metaphor for knowledge, and increased knowledge through higher education is the key to our future."
Accredited four-year and two-year universities, as well as many technical colleges, are approved to receive funds from the Indiana Family College Savings Plan. Eligible expenses include tuition, books, room and board.
If the beneficiary of the account chooses not to pursue higher education or if the funds are needed for emergency purposes, the funds may be withdrawn. There will be a 10 percent penalty on earnings, but not on principal.
Those interested in receiving an enrollment kit should call the Indiana Family College Savings Plan toll-free at 1-888-814-6800. Or they can e-mail requests to CollegeSave@em.fcnbd.com