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Governor Perdue Proclaims September 'College Savings Month'

Tuesday, September 12, 2006  Contact: Office of Communications 404-651-7774

Governor Perdue Proclaims September ‘College Savings Month’

Georgia’s 529 College Savings Plan Tops $400 Million in Savings for Higher Education

ATLANTA – Governor Sonny Perdue today announced September as “College Savings Month” in Georgia, encouraging Georgia parents to save for their children’s college education. The Georgia Higher Education Savings Plan (GHESP), Georgia’s 529 college savings plan, allows for tax-free withdrawals for qualified education expenses such as tuition, room and board, books, fees and required equipment.

“A college education is one of the most important things we can help provide our children to prepare them for success in life,” said Governor Sonny Perdue. “By starting to save and plan for college today with the Georgia Higher Education Savings Plan, families can make college more affordable tomorrow.”

Since being launched in April 2002, Georgia’s college savings plan has been widely recognized as one of the best college savings plans in the country. Money magazine recommended Georgia’s college savings plan for state residents, and the 529 plan website, www.savingforcollege.com, continues to give the Georgia program high marks. Consumer advocate Clark Howard lists the Georgia program on his “Honor Roll” of 529 college savings plans.

Assets in the GHESP have grown significantly in the last year from $299 million in September 2005 to $408 million today – a 36 percent increase. In the same period, the total number of GHESP accounts increased by 18 percent, from 59,000 last September to a current total of almost 70,000.

In August, Congress made permanent the tax-free treatment of withdrawals from 529 plans. The tax treatment for 529 plans allows tax-free withdrawals for qualified education expenses such as tuition, room and board, books, fees and required equipment. This tax treatment was set to expire after 2010, but was made permanent in the recently passed Pension Protection Act. Georgia’s Congressional delegation led the nation by sponsoring the tax permanency legislation. Both senators and a majority of Georgia’s representatives co-sponsored bills calling for permanency of the current tax treatment for 529 plans.

“I want to recognize the contributions of Senators Chambliss and Isakson and Georgia’s Congressional delegation for achieving this long-sought legislative goal,” said Governor Perdue.

The GHESP provides significant tax advantages in addition to tax-free withdrawals as an incentive to save for college. An account in the program can grow on a tax-deferred basis, and Georgia taxpayers may qualify for a state income tax deduction of up to $2,000 per year, per account beneficiary. Assets in a GHESP account can be used at any of Georgia’s higher education institutions and at colleges nationwide.

“A college education can double a child’s earnings potential in his or her lifetime,” said Governor Perdue. “College Savings Month serves as an important reminder for families to begin saving and investing in their children’s future now.”

Highlights of Georgia’s college savings plan include:

  • Low Expenses – The GHESP has low costs so more of a member’s investment can go toward education expenses. The low annual asset-based management fee of 0.78 percent covers all expenses associated with the plan. There are no commissions, loads, application costs or other fees.
  • Tax-Free Growth and Withdrawals – Any earnings in GHESP accounts grow free from federal and state income tax. Through the power of compounding, the money saved in a tax-deferred account can provide greater potential for growth. And withdrawals used for qualified education expenses, including tuition, room and board, fees and books will be free of both federal and Georgia income tax.
  • State Income Tax Deduction – Account owners who file an itemized Georgia tax return can take an annual state income tax deduction of up to $2,000.00 per beneficiary if they qualify based on income level. Contributions postmarked by April 15 can be applied to the previous tax year.
  • Investment Options – The GHESP offers families five investment options: Guaranteed, Managed Allocation (also known as an “age-based” investment option), Aggressive Managed Allocation, 100 percent Equity Fund and a Balanced Fund option.
  • Estate Benefits – The GHESP offers generous federal gift and estate tax advantages of up to $60,000 ($120,000 for married couples) pro-rated over a five-year period for each beneficiary.

The program web site - www.GAcollegesavings.com - provides complete information and includes on-line enrollment and other on-line services. Information and applications can also be obtained toll free through the customer service center at 1-877-424-4377. There are no income or residency restrictions on who is eligible to open an account.

Account value will fluctuate based upon a number of factors, including general financial market conditions. Investments are made through Teachers Personal Investors Services, Inc., distributor.

For more information about Georgia's Section 529 college savings plan, contact Chuck Penuel at (404) 463-0000 or by email at chuckpenuel@otfs.ga.gov.

The following is the text of Governor Perdue’s proclamation designating September as College Savings Month:

COLLEGE SAVINGS MONTH

WHEREAS: Georgia families recognize that a college education is one of the most important things we can do for our children to prepare them for success in life. However, the constantly rising costs of a college education can, without proper planning, jeopardize a family's ability to ensure their children have access to higher education; and

WHEREAS: There is an earnings gap between those with a high school diploma and those with a college degree or beyond that exceeds $1 million, making college an investment in our children’s future; and

WHEREAS: Loan programs are a major source of financial aid for college students, and college students are graduating with more debt than in previous decades. Almost two-thirds of college students graduate with debt, and many college graduates repay large amounts of debt long after they have completed their education; and

WHEREAS: It is in the best interest of Georgia families to encourage saving for higher education expenses so that access to educational opportunities is enhanced for our children, grandchildren and others, without the crushing burden of education loan debt; and

WHEREAS: In accordance with state and federal law, the State of Georgia operates the Georgia Higher Education Savings Plan, a Section 529 college savings plan that offers both state and federal tax advantages to encourage saving for the expense of higher education and to promote educational opportunity for all Georgians; now

THEREFORE: I, SONNY PERDUE, Governor of the State of Georgia, do hereby proclaim September 2006, as COLLEGE SAVINGS MONTH in Georgia and call upon all Georgians to join me in recognizing the value of higher education and to begin saving early and consistently for our children's future.

In witness thereof, I have hereunto set my hand and caused the Seal of the Executive Department to be affixed this 30th day of August in the year of our Lord two thousand six.

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