WASHINGTON – Officials with Maryland’s Prepaid College Trust said Thursday that they hope to sign up 10,000 families by July, after a disappointing first year in which they got only 1,358 people to join.
The program, which was new this year, allows families to prepay future college tuition costs, paying in monthly installments or in one lump sum, and gives them a tax break on the investment.
But trust officials did not have the time or the advertising budget to reach parents before the July 31 cut-off date for enrollment this year, said Doug Neilson, marketing director for the trust.
Since then, he said, the trust’s full-time staff of six has been working around the state to generate knowledge of the fledgling program.
“Starting in August, we have been meeting with school PTA groups to enlist their help,” said Neilson. He said the staff has also been meeting with other groups around the state to generate interest in the trust.
“Last week I met with the Maryland Society of Accountants to let them know both as parents and accountants who can tell clients about the tax breaks,” he said.
Tuition contract holders can deduct up to $2,500 per year from their state income taxes for contributions to the tuition savings plan. Earnings from the plans are also exempt from state income taxes.
Neilson said the program also hopes to get more money for advertising from the legislature.
“Virginia’s advertising budget was bigger than our entire operation,” said Neilson.
Virginia has sold 22,698 contracts to its 2-year-old plan, according to the College Savings Plan Network, an affiliate with the National Association of State Treasurers. As a result, said Neilson, Virginia’s tuition trust program is also 75 percent self-sufficient.
Neilson said Maryland would be self-sufficient — able to operate without any state funds — if it sells 10,000 contracts. State funds only go to cover administrative costs of operating the trust and are not used to pay for tuition of children enrolled.
The College Savings Plan Network said Pennsylvania had 22,029 contracts as of 1998 and Florida’s program, now in its 10th year, had over 468,000 contracts.
The District of Columbia is going to begin a similar program this year. Delaware and West Virginia started tuition savings programs this year, but enrollment numbers were not available for those states.
Neilson said that trust officials hope the benefits of Maryland’s program will be able to attract the same level of interest as those programs in other states.
Under Maryland’s program, parents or other sponsors of a prospective student buy a contract for tuition at a public four- year or two-year school in the state. When it comes time for the student to go to college, tuition and fees are paid directly from the trust to the institution.
The trust guarantees that tuition and fees will be paid in full, regardless of how high the costs may have climbed over the years.
A student can also use contract proceeds for tuition and mandatory expenses at out-of-state or private universities, but not for any additional expenses. Full tuition at those institutions is not guaranteed by the plan.
But the plan is not the solution for all students, said one college finance expert.
“A prepaid plan is great for someone if their children are 4, 5 or 6, but when someone is really confronted with college, we can help,” said William Hastings, president of Academic Management Services.
His company lets students make tuition payments monthly, instead of all at once at the beginning of the semester, for a $50 fee. AMS works with several Maryland colleges, including Towson University, Bowie State, Morgan State and Washington College.
Neilson said he is heartened by the number of inquiries the trust has received since the last enrollment period ended. He said the trust now has more than 20,000 people on its mailing list.
The next open enrollment period for the tuition trust is from Feb. 10 through June 10.