WASHINGTON – Virginia education officials want to ease the pain of paying for college, and Maryland officials may not be far behind.
Virginia is one of 12 states that has established a way for families to save money for college, years before their children even apply.
Virginia’s Prepaid Education Program allows families to set up a state account in which they deposit a set amount of money each month, or a lump-sum payment, for college tuition payments.
The fund can be established after a child is born, until he or she reaches college age. The money can be withdrawn and used for college tuition up to one month before the child enters college.
“State college savings programs can offer families an affordable and safe way to save for college,” Diana Cantor, executive director of the Virginia Higher Education Trust Fund, said Friday.
The amount of monthly payments is determined by the average cost of Virginia’s colleges and universities, Cantor said. Although families are encouraged to send their children to in-state public institutions, the money also can be transferred to private and out-of-state schools.
The program allow families to make payments at the current rate of tuition prices and ensure that money will keep pace with tuition inflation.
“Most people think college is more expensive than it really is, so they don’t save,” thinking it’s futile, said Barbara Jennings, chairwoman of the College Savings Plans Network, an organization that gives information to states interested in starting college savings programs.
The group, formed in 1991 as an affiliate to the National Association of State Treasurers, encourages families to save money instead of relying on loans to pay for their child’s education.
“We live under a credit card mentality,” Jennings said Friday. “It’s a societal trend to enjoy now and pay later.”
The Maryland General Assembly this year passed a law to study whether the state should set up a prepaid tuition program. The bill, signed by Gov. Parris Glendening on April 30, established a task force to research and develop a program and to present its findings by Dec. 1.
Several students interviewed Friday at the University of Maryland at College Park said they thought the plan is a good idea.
“My family had money saved, but we later had to use it” for something else, said Joanna Mueller, a special education major at the University of Maryland. “It’s been a real struggle to put me through school.”
The 20-year-old transfer student said she has taken out loans and received financial aid to attend the University of Maryland.
Two other programs – Savings Plan Trusts and State College Savings bonds – also have been established in several states.
The savings plan is similar to the tuition program, but money only can be placed monthly in the savings account. No lump sums are allowed.
Under the savings bond program, families can buy bonds, which have compound interest, to help offset the cost of college. -30-