• Intrinsic value of education• More and better opportunities• Less likelihood of unemployment• Annual median earning differential:

– High School Grad = $33,800– Associate Degree = $42,000– Bachelor's Degree = $55,700

• Lifetime difference: – Bachelor Degree recipient earns 66% more– $800,000 to $1 million

Source: College Board, Education Pays 2010

Value of Higher Education

Combination of:•Grants/Scholarships

– Federal– State– School/Institutional– Private

•Loans– Federal– State– Home Equity– Credit Cards

•Then-current income•Savings

Financing College

• PA 529 College Savings Program– PA 529 Guaranteed Saving Plan (GSP)– PA 529 Investment Plan (IP)

• Offered by the Commonwealth of PA

• Managed by the PA Treasury

• Recognized by the federal government

• Provides features and benefits not available elsewhere

Great Way to Save

• Tax deferral and exemption

• PA income tax deduction

• Estate and gift tax benefits

• Pa inheritance tax exemption

• No income restrictions

Tax Advantages

• Protects state financial aid eligibility

• Small impact on federal financial aid eligibility

• Opportunity for guaranteed tuition discounts at over 260 private colleges --SAGE

• Opportunity for cash back rewards – Upromise

• Protection from creditors

Other Advantages

1. Savings grow to keep pace with tuitionincreases (subject to premiums and fees)

– Save now for one semester, have enough for one semester later

– Peace of mind – not subject to ups and downs of financial markets

2. Use for nearly all education-related expenses

3. Use at nearly any college and many career schools nationwide, and even some abroad

4. Withdraw funds for any reason at any time (subject to taxes and penalties)

PA 529 GSP Overview

• Contributions grow at inflation rate of your designated Tuition Level (subject to premiums and fees)– Not tied to investment performance– GSP Fund obligated to pay at tuition inflation

rate

• Obligation of GSP Fund itself, not the Commonwealth

• Dedicated to payment of PA 529 GSP obligations and cannot be used for any other purpose

About the “Guarantee”

• Contribution of $2,942 in 9/98 = 1 semester at Pitt

• In 9/10 1 semester at Pitt = $7,038

• Market value of contribution in 9/10 = $4,000

• Payment = $7,038

Guarantee Example

• Tuition• Mandatory Fees• Room & Board *• Required Books• Required Equipment• Required Supplies• Special Needs Services• Computers (through 2010)

*For both on-campus and and-off campus. To be a qualified expense, student must be attending at-least half-time.

Qualified Expenses

Use your funds at:•Nearly all Private Colleges and Universities•Nearly all Public Colleges and Universities•Nearly all Graduate and Professional Schools•Many Vocational, Technical and Career Schools

U.S. Dept. of Education Web site for Eligible Schools:

http://www.fafsa.ed.gov/FOTWWebApp/FSLookupServlet

Any school with a FAFSA school code is eligible.

Eligible Schools

Exclusively for Pennsylvanians:•Account Owner or Beneficiary must be Pennsylvania resident•Account owner must be over 18 years old

Account Owner Controls:•All account decisions•Anyone can make contributions to the account, but account owner retains control •Names beneficiary: any age, no relationship requirement•Change beneficiary to “family member” of previous beneficiary

Account Owners & Beneficiaries

• Open an account (minimum $25; maximum $368,600)– Online at PA529.com– Free enrollment: Code SAVE50– Designate “Tuition Level”

• Make contributions– Any amount of $25 or more at any time– Set-up payroll deduction or automatic bank withdrawals– Have family and friends help through Ugift

• Watch your account grow– Contributions are converted to “PA 529 GSP Credits”– Value of PA 529 GSP Credits increase each year with tuition

inflation

• Use your account when your child enters college– You direct who gets paid, how much, and when

How the PA 529 GSP Works

Choose Average Level OR Specific PA Public School

State Related Penn State (including the Pennsylvania College of Technology); Pitt; Lincoln; Temple

State System of Higher Education

Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock, and West Chester

Community Colleges Allegheny County, Beaver County, Bucks County, Butler County, Delaware County, Harrisburg Area, Lehigh-Carbon County, Luzerne County, Montgomery County, Northampton County, Pennsylvania Highlands, Philadelphia, Reading Area, and Westmoreland Area

Thaddeus Stevens College of Technology

Ivy League

Private 4-yr

Tuition Levels

Flexibility of Tuition Levels

•Beneficiary does not have to attend the school - or type of school - designated by your Tuition Level

•Change Tuition Level any time

•Change retroactive to date of each contribution

•Automatically changed if student attends a Pennsylvania publicly funded school

•Importance of tuition levels• Aids actuarial analysis• Helps account owners measure progress

Changing Tuition Levels

PA 529 GSP Credits

•Each contribution is divided by the PA 529 GSP credit rate for designated tuition level

•Result is number of PA 529 GSP credits for that contribution

•Number of PA 529 GSP credits of each contribution are added to yield total number of credits in account

Converting contributions to PA 529 GSP Credits

Converting contributions to PA 529 GSP Credits

PA 529 GSP credit vs. academic credit

•PA 529 GSP credit = Unit of value

•Academic credit = Measure of progress toward degree

•12 PA 529 GSP credits generally cover cost of one semester’s tuition

• Allows full-time student to take 12-18 academic credits at no additional cost

• 96 PA 529 GSP Credits = 4 years of tuition**

**Additional credits needed to cover other qualified expenses

• Set annually by PA Treasury (effective 9/1 - 8/31) for each Tuition Level

• Based on actual tuition at Tuition Level

• May be same, more (include “premiums”) or less (include “discounts”)

PA 529 GSP Credit Rates

• Tuition inflation rate– Each year, when schools increase tuition, each

GSP Credit increases in value by the same percentage (subject to fees); the accumulation of the yearly increase is your tuition inflation rate.

• Tuition inflation value– Dollar amount available for qualified expenses– Dollar value is calculated by multiplying the total

GSP Credits times the then-current per-credit actual tuition rate at the appropriate tuition level.

Note: Each contribution subject to approximate one-year maturity requirement

Your Tuition Inflation Value

Tuition inflation gained in last 5 years(Academic years 2005-06 to 2010-11 )

• Community College Average 12.84%• State System of Higher Education 12.93%• Ivy League Average 18.55%• State-related Average 22.26%

• Penn State University 23.40%• University of Pittsburgh 24.29%

• Private 4-year College Average 24.03%

Past performance is not a guarantee of future results

PA 529 GSP Past Growth

• Enrollment Fee– $50 by mail; $25 on website. Further

discounts may be available– FOR YOU! Free enrollment: Code SAVE50

• Annual Account Maintenance Fee – 0.49% of Tuition Inflation Value (less than ½

penny per dollar)

Fees

My child decides not to attend school

My child receives a scholarship

My child dies or becomes disabled

My family has a financial hardship

You can withdraw your money at any time, for any reason – Nonqualified Withdrawal

What If?

It’s never too early, but it’s never too late!

It’s easy!

Enroll: Online: www.makecollegepossible.com Or call: 1-800-440-4000 for enrollment materials.

Start Saving Now!

.Pennsylvania 529 Investment Plan

• Investments by Vanguard Group

• Subject to risk of financial markets

• Wide array of investment options

• Offers many of the same benefits and options discussed today

• For more information– Visit PA 529.com– Call 1-800-440-4000

Pennsylvania’s Other Plan

The PA 529 Guarantee Savings Plan• 37,724 students used their accounts• Attended over 1,748 different schools• $792 million has been paid• $239 million has been growth• 43.2% increase in value from contribution to use.

The PA 529 Investment Plan • Over 7,100 students used their accounts• $129 million has been paid• $12.9 million has been growth• 11% in value from contribution to use

Past performance is not a guarantee of future results

–

Success Story

This presentation provides only highlights of the PA 529 GSP. For important details about the PA 529 GSP, including how the guarantee works and its limitations; the tax benefits, requirements and consequences of nonqualified withdrawals; and investment objectives, risks, and costs, please carefully read the PA 529 GSP Disclosure Statement before investing.

It is available by visiting PA529.comor by calling 1-800-440-4000.

Questions?