PHILADELPHIA, (PRNewswire) – The benefits of saving for college through Pennsylvania’s Guaranteed Savings Plan (GSP) just keep getting better, according to State Treasurer Robert P. Casey, Jr. Last November, Pennsylvania’s GSP became the only 529 plan in the country to earn an investment-grade rating from Moody’s Investors Service.
“This new tax break gives families another incentive to start saving for college now,” Casey said. “Paying for a child’s higher education with money that you’ve saved costs about half as much as paying for that same education with money that you’ve borrowed.”
Casey said that Pennsylvania’s Guaranteed Savings Plan is the only college saving option that provides both tax breaks for contributions and qualified withdrawals, along with a guarantee that investments will keep pace with tuition inflation. Over the next 10 years, tuition and expenses at a four- year state college in Pennsylvania are expected to almost double from $12,000 to $20,000 per year.
Thetax law allows any investor in Pennsylvania’s GSP (parents, grandparents, relatives and friends) to deduct up to $12,000 in contributions, per beneficiary, on their state income tax.
“Now, for the first time, contributions to Pennsylvania’s Guaranteed Savings Plan are state tax deductible, and you will pay no state or federal taxes on the earnings in your account when you use the money for qualified higher education expenses like tuition, room and board, books, supplies, and fees,” Casey said. “There’s never been a better time to sign up and start saving now.”
Casey stressed that the Guaranteed Savings Plan offers benefits to Pennsylvania families that no other 529 plan does, including better financial aid treatment (i.e., GSP assets do not affect a student’s eligibility for state financial aid), tuition discounts at select private schools, protection from creditors, exemption from state inheritance tax, and matching funds for low-income families.
Pennsylvania’s GSP is the only Section 529 college savings plan in the country to earn an A3 rating from Moody’s Investors Service, one of the world’s most respected sources for credit rating and risk analysis. Last year, Moody’s rated an investment in the GSP to be “upper medium grade” and subject to “low credit risk.”
Since 1993, Pennsylvania families have contributed over $1.1 billion to the GSP. During the same period, nearly 65,000 payments have been made to over 15,000 students at more than 1,000 schools. For more information on the GSP, visit http://www.tap529.com/ or call 1-800-440-4000.