Independent 529 Plan
Stephens a founding member in the Independent
529 Plan
In 2003, Stephens joined with more than 220 private colleges and
universities nationwide to become a founding institution of the
Tuition Plan Consortium, which offers a prepaid tuition plan. Now
255 colleges strong, the Independent 529 plan offers a tax-advantaged
way for families to save for a private college education.
“The plan represents a move by private colleges to make quality education more affordable,” says Stephens College President Wendy B. Libby, who serves as chair of the board of directors of the Consortium, a national group of independent colleges and universities formed in 1996. “There are many ways to save for college, but Independent 529 is more than a savings or prepaid plan. It’s the only plan of its kind that allows for prepayment of tuition at a discount, protects against future tuition increases and stock market volatility, is portable across state boundaries, and is tax-exempt if used for education.”
This is how the plan works: Obtain an enrollment kit by calling (888) 718-7878 or visiting the Web site at www.independent529plan.org. Then purchase a certificate that guarantees a certain percentage of tuition, which varies depending on each participating institution’s current tuition and certificate discount rate set by that college for the year the certificate was purchased. (A certificate purchased for $10,000 might guarantee a year’s worth of tuition at College A or one-half year’s tuition at College B.) The Web site provides a tool to calculate the tuition benefit at different member colleges. Students choose their college after they have applied and been accepted through the standard admission process.
Certificates are held for three years minimum before redemption. After one year, they may be refunded or rolled over into another 529 plan; withdrawals used for enrollment at non-member colleges, including publics, are not subject to federal income tax. There are no fees of any kind to the consumer. Certificates are transferrable to other family members, including first cousins and in-laws. Colleges retain control over their own tuition and fees, but must offer a minimum of .5% per year off current tuition rates.
The plan is the first 529 plan, so named for the
IRS code that defines them, to be sponsored by colleges rather than
by the states. Administered by TIAA-CREF Tuition Financing, Inc.,
the Independent 529 plan covers only tuition and fees; however,
the consortium hopes to extend the plan to include room and board
as well as graduate study.
Other founding institutions of the Tuition Plan Consortium include
Washington University, St. Louis University, Drury University, Princeton
University and Amherst College. At least 20 women’s colleges
are also founding members, including Smith, Mt. Holyoke, Wellesley
and Spelman.
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