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VSAC Announces Improvements to College Savings Program
The Vermont Student Assistance Corporation (VSAC) has renewed its agreement with TIAA-CREF Tuition Financing, Inc. (TFI) to manage the Vermont Higher Education Investment Plan (VHEIP) — Vermont’s official 529 college savings plan — and is offering several enhancements to benefit Vermont families.
The number of VHEIP investment options has expanded from three to six to provide families a wider range of choices with varying strategies and degrees of risk. Investors may choose options that range from conservative to aggressive, selecting those that best fit their college savings objectives and investment philosophy.
In addition, program management fees have been restructured to help account owners put more of their investments toward their college savings goals. Of particular note, fees have been reduced for the Managed Allocation Option, a popular choice for many families because the underlying investments automatically adjust as the student beneficiary ages.
As of September 30, the investment lineup is as follows:
Managed Allocation Option — fees decrease from 80 to 53 basis points (50 basis points equals one-half of a percent)
Interest Income Option — continues as a zero-fee option
100% Equity Option — fees remain at 80 basis points
Equity Index Option (new) — fees set at 53 basis points
Balanced Option (new) — fees set at 70 basis points
Fixed Income Option (new) — fees set at 78 basis points
Effective November 30, two options will change:
The Interest Income Option will be renamed the Principal Plus Interest Option with a guaranteed principal investment strategy — continues as a zero-fee option
The 100% Equity Option will be renamed the Diversified Equity Option with an active management strategy — fees increase to 89 basis points
In addition to those changes, plans are underway to make managing a VHEIP account online much easier. Account owners will be able to view electronic quarterly and annual statements online, rebalance existing assets to new or existing investment options, and make withdrawals to the bank account on record.
Vermont Higher Education
The Vermont Higher Education Investment Plan launched in December 1999 and has grown to an asset value of $100 million in about 9,600 accounts. VHEIP is the only 529 plan for which Vermont taxpayers can claim a state income tax credit of up to $250 per taxpayer per beneficiary (up to $500 for married couples filing jointly) on contributions in each taxable year. Also, contributions and any earnings grow free from federal and Vermont income taxes; withdrawals remain tax-free as long as they are used for qualified expenses, including tuition, room and board, books, and fees at most colleges nationwide and some abroad.
A VHEIP account can be opened for as little as $25 per investment option, and individuals can make periodic or regular contributions to the account with a minimum of $25 (or $15 per pay period by payroll deduction, if offered).
The program Web site — www.vheip.org — provides complete information and online enrollment. Information and applications can also be obtained by calling toll-free 1-800-637-5860. There are no income or residency restrictions on who can open an account.
VSAC is a public, nonprofit corporation established by the Legislature in 1965 to help Vermonters plan and pay for education or training beyond high school. TFI, a national leader in managing 529 college savings plans, is part of the TIAA-CREF group of financial services companies, the leading provider of retirement services in the academic, research, medical, and cultural fields.