NU Online News Service, July 12, 12:15 p.m. – T. Rowe Price Associates Inc., Baltimore, has won a contract from the Maryland Prepaid College Trust board to start one college savings plan and manage a second, established plan.
T. Rowe Price will set up the new Maryland College Investment Plan, and take over administration of the Maryland Prepaid College Trust, under the supervision of the Maryland Higher Education Investment Board.
Investments in both plans qualify for the federal tax breaks offered through Section 529 of the Internal Revenue Code.
Maryland also allows participants a state income tax deduction of $2,500 per account.
Consumers can invest up to $175,000 per beneficiary in the new college investment plan and choose from a list of aggressive, moderate and conservative investment options.
Students can use plan assets to pay for tuition, fees and books at private colleges outside of Maryland as well as public colleges and universities in Maryland, T. Rowe Price says.
Because there are no age limits on the accounts, adult consumers can use the accounts to save for themselves as well as children, other relatives or young friends, the firm notes.
The other plan, the state-guaranteed, prepaid college trust, is less flexible.
Consumers must choose from a list of seven different college savings targets, ranging from enough cash to cover tuition and mandatory fees for two years at a Maryland community college, to enough to cover tuition and fees for five years at a state four-year college.
Either the purchasers or the children must be residents of Maryland or the District of Columbia.
Only children who are in the 10th grade or younger can enroll.
But the state guarantees that paid-up accounts will cover the amount of education specified in the original account contracts.
The trust will also make some contributions for students who attend private colleges and out-of-state colleges.