BALTIMORE — A Maryland 529 market research study revealed that 24 percent of respondents say they were not saving for their children’s college expenses.
The 2013 study, also revealed that 71 percent of those respondents cited the reason they aren’t saving for future college expenses is because they simply can’t afford to do so.
To help Maryland families in need, the Save4College State Contribution Program offers eligible enrollees in a Maryland College Investment Plan a state contribution of $250.
Individuals making less than $112,500 or couples making less than $175,000 may qualify to receive the state contribution.
In some cases, new enrollees can receive the state contribution with a minimum contribution of $25.
“Any individual who opens the Maryland College Investment Plan and starts saving for college is going to benefit the most, especially if the individual has low to moderate income,” said Lauren Shipley, executive director of Maryland 529, an independent nonprofit state agency that provides flexible and affordable 529 plans to help Maryland families save for future college expenses and reduce dependence on student loans later.
“According to the Corporation for Enterprise Development 2014 Fact File, children with $500 or less saved for college are three times more likely to enroll and four times more likely to graduate, compared to their peers without college savings,” Shipley said. “Through this program, the state will be contributing $250 to the eligible applicant’s account, so it’s a great opportunity for families to get a jump start on college savings for their children.”
The Maryland Legislature enacted new laws that took effect July 1, 2016, making it easier for families to save for college.
By taking advantage of the Maryland 529 plan, an individual can contribute to this qualified plan that is established for a beneficiary and deduct a certain amount of the contribution on your Maryland income tax return.
Because of the new laws, individuals can deduct up to $2,500 per beneficiary per donor. Married couples with one child can open one account and each can contribute $2,500 to the same account and maximize their Maryland deduction at $5,000 per beneficiary, according to a published report.
If contributing $5,000 or more per beneficiary in any given year, the surplus can be carried over and used over the next 10 years to soak up the maximum annual deduction amount.
For anyone with numerous accounts for the same beneficiary, they can now be combined moving forward. This change makes it easier for parents to manage their child’s college savings plan while giving them peace of mind, according to officials.
New rules also allow the state to make a matching contribution of $250 per beneficiary to the Maryland College Investment Plan for accounts established after December 31, 2016. The law is designed to help lower to middle income families.
“The Save4College State Contribution Program is rapidly gaining popularity and applications are being submitted daily,” Shipley said. “The application period runs through June 1, 2017, so we expect to see a significant increase in the number of applications as we get closer to the June 1 deadline. We do encourage residents who are interested in applying for the program, to apply sooner than later in case they have questions or want more information about the program before applying.”
It’s important residents apply for the State Contribution Program, the account minimum will be waived and applicants won’t be required to make any contributions at the time of account opening, Shipley said.
“Saving for college now instead of taking out a student loan can cut the out-of-pocket cost of college in half,” she said. “So, it’s important for families to start saving now to reduce the need of student loan debt. Every little bit of money saved for your child’s college education will help reduce the amount you will need to borrow in the future.”
For program details, income qualifications and to apply online, visit: www.maryland520.com/mdmatch250. Also call 1-888-4MD-GRAD and select option 1 to speak with a Maryland College Investment Plan/T.Rowe Price representative. Callers should be sure to indicate they are interested in applying for the Save4College State Contribution Program.