Worrying about how you are going to pay for college with tuition costs rising rapidly each year? If you answered yes to this question and are a Pennsylvania resident, there is a possible solution. The PA-529 GSP (Guaranteed Savings Plan) is a savings plan that guarantees your savings will keep up with tuition inflation. Basically, if you save up enough money to pay for a semester of college today you will have enough money to pay for college tomorrow, no matter how much tuition costs rises. Sounds complicated right? It is!
How do you determine how much a student will pay for college per semester? The answer is: tuition level. Tuition level is the type of school you are saving for, for example, if you are saving for a private school education then your semester average is determined by PA Private Four-Year College Average. The selection of the tuition level is a step that is included when you open up the savings account. Once you select your tuition level you are not locked into that specific level; A person can change their tuition level at anytime.
Types of tuition level include:
How much do I have to contribute? The lowest amount anyone can contribute to an account is $25. There are numerous ways to contribute, for example, a person could make contributions whenever he/or she wants, periodically, or automatic contributions by payroll deduction. Anyone can contribute to the account on behalf of th estuden: grandparents, aunts, uncles, and even family friends. The maximum amount allowed per savings account is $368,600. Each time someone makes a contribution it converts to a GSP credit.
What are GSP Credits? It is the amount of credits a person needs (based off tuition level) to accumulate over the years to cover tuition, which can change as tuition rises. About 96 GSP Credits will cover four years of tuition for most four year colleges; for community colleges, you generally would need 60 GSP credits for an Associate’s Degree. The amount the credit is worth is determine by the GSP Credit Rate, which can change as tuition rises. A GSP Credit rate for a Community College tuition level is $88.81, which means for every $88.81 contributed you gain a credit. If the GSP Credit Rate changes the amount for each GSP Credit changes. By knowing the change you are able to be up to date with tuition inflation, instead of paying a single flat rate each time. For up to date credit rates for this school year please visit http://www.makecollegepossible.com/
How much should I save for tuition? These amounts estimate how much needs to be saved each month for 18 years to cover tuition based on 2009-2010 school pricing:
If your tuition level is: Your monthly payment should be:
- PA Community College Avg. $33.93
- PA State System of Higher Edu. Avg. $150.36
- PA State-Related Universities Avg. $366.02
- Four-Year Private College Avg. $712.67
- Ivy League School Average $1,052.24
What colleges accept the PA-529 GSP Plan for payment? Nearly ALL schools accept this type of payment, even career and technical schools that may be abroad. The school must be eligible to participate in the federal financial aid programs. For a list of schools, see www.fafsa.ed.gov/FOTWWebApp/FSLookupServlet.
When should I start saving? Right away! If you enroll online you get to take $25 dollars off of the registration fee, which is nomally $50. If you enroll within 6 months of your childs birth or adoption the registration fee is WAIVED. It is better to start as early as possible, but it is also better to start late than never!
The number one issue a student faces when choosing a school is price. By starting a PA-529 GSP and watching the savings accumulate will make the students number one issue to go where he/she can get the best education, instead of the issue being affordability. For further information please visit http://makecollegepossible.com.
Even better, the deductions made to a 529G Plan are tax deductible in PA, up to $12000 per contributor per child! So, for three children where each parent contributes the maximum, the tax savings are $2210!
There are a myriad of other 529 plans available. This month Governor Rendell signed a bill, allowing deductions for PA and out of state plans. So start saving as you can! You lose nothing, and gain alot!
