State Rep. Adam Ravenstahl Offers Advice on Hedging on Future College Tuition Increases

The state budget that Republican lawmakers pushed through this year cut $200 million in higher education funding, resulting in tuition increases across the state.

The University of Pittsburgh raised tuition 8.5 percent, Penn State increased tuition at its main campus nearly 5 percent, and state-owned universities such as California, Edinboro, Indiana and Slippery Rock raised their rates 7.5 percent.

But residents have a hedge against future tuition increases through the Pennsylvania 529 Guaranteed Savings Plan, which the state Treasury administers.

The plan helps savings grow to meet the future cost of education.  When used for qualified higher education expenses, contributions grow at the rate of tuition inflation. If you save enough for one semester today, you will have enough for one semester in the future, no matter when or how much tuition has increased.

Families participating in the plan receive tax-deferred growth on earnings and tax-free withdrawals when funds are used for qualified education expenses. To help more families save for higher education, the state Treasury is offering free enrollment, a $50 savings, for new Guaranteed Savings Plan accounts opened through the end of September at its website, www.pa529.com. Use code SAVE50 when prompted.

Pennsylvania offers a second 529 plan, the PA 529 Investment Plan, in which returns are based on financial market performance. Families saving in the PA 529 Investment Plan receive the same tax advantages as those using the Guaranteed Savings Plan.

A 529 plan may be used at any school that is accredited and eligible to accept federal financial aid. Nearly all colleges and universities, community colleges, and career or technical schools are eligible. A complete list is available at www.fafsa.ed.gov. It even includes some colleges located outside of the United States.

A plan can be started with as little as $25 per month.

Complete information about the program, including enrollment forms, is available at www.pa529.com.

If state Rep. Adam Ravenstahl's office can be of assistance with this or any other state-related program, you are urged to contact it.

Ravenstahl's office is at 3689 California Ave., Pittsburgh. The phone number is 412-321-5523.