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RIT among 200 colleges offering new tuition program

Families could save thousands with new Independent 529

A new savings plan being offered by RIT will allow families to lock in tomorrow’s tuition at less than today’s price. RIT is participating in an Independent 529 Plan, a new prepaid college tuition plan tailored for private colleges.

“We see this plan as part of our ongoing efforts to make higher education accessible to more families,” said Verna Hazen, RIT’s financial aid director. “For purchasers, the effectiveness of the Independent 529 Plan is not dependent on the performance of the stock or bond markets. Rather, contributors are actually pre-purchasing tuition, in part or in whole, at less than today’s prices.”

Families have been attracted to 529 plans because of the tax-free savings. Benefits are also transferable to other family members and refunds are available if a child receives a scholarship or decides not to attend college. But unlike the popular state-sponsored 529 plans, the Independent 529 plan has no investment risk or management fees.

“Regardless of whether a student attends RIT or another one of the other 200 private institutions in our consortium, the Independent 529 plan represents a way for parents to contribute and pay for private college without worrying about either investment risk or tuition inflation,” said Hazen.

Here is how the plan works:
The plan enables a parent to purchase a certificate for part or all of tuition that can be used at any participating private college. They pay today’s prices, less a discount that reduces the cost even further. At a minimum, institutions must offer a half percent per year off current tuition rates.

When it is time to enter college, parents redeem the certificate for the guaranteed amount of tuition no matter how much colleges are charging at the time the new freshman enrolls. The certificate may vary in how much tuition it pays. Parents can get started with contributions as low as $25 per month.

For more information on RIT’s Independent 529 Plan, contact Verna Hazen, financial aid director, at 585-475-5520 or vjhsfa@rit.edu. Information is also available online at www.independent529plan.org.

Independent 529 Plan key features:

  • Consumers pay at today’s tuition rate, an opportunity to beat inflation.
  • No fees of any kind.
  • A parent, relative or friend at any income level can establish an Independent 529 Plan for a beneficiary (eventual student) and may also transfer use of the tuition certificates to a wide range of relatives of the beneficiary.
  • Accounts can be opened for as little as $25 provided contributions total at least $500 within two years. The maximum lifetime contribution limit is equal to five years worth of tuition at the most expensive participating private college in the plan.
  • The number of participating private colleges and universities, now at more than 200, may increase over time.
  • Contributions are made on an after-tax basis and any increase in value realized when a tuition certificate is redeemed will be free of federal and state taxes.