A four-year degree at a state-supported university is projected to cost $150,000 in 15 years, with private tuition to cost more than $300,000. To get a head start, Treasurer Converse Chellis recommends the state Future Scholar College Savings Plan.
Since 2007, when Chellis first took over as S.C. treasurer, the savings plan has attracted 20,000 more accounts, many of them belonging to South Carolinians who saw the treasurer's television commercials. The latest features Chellis stuffing stockings for a couple of children who were up waiting on Santa Claus.
The accounts grew from about 63,000 to 83,000 in the past two years. When Chellis came into office, more than half of the accounts were from out of state. The growth since then is mostly from S.C. residents, Chellis said.
"We started trying to get the word out to South Carolinians that this is a good plan," Chellis said. He opened accounts for his grandchildren.
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The savings plan allows parents, grandparents or anyone to put money in an account to go toward tuition at any accredited university or college in the world. The plan comes with many perks, including unique estate planning choices and portfolio diversification, Chellis said. Investors receive state and federal tax exemptions on earnings, and neither gains nor income are taxed when the amount is cashed out, he said.
The younger the child, the more aggressive the investment, Chellis said. It grows more secure as the child ages.
An account can be opened with $250, and contributors can choose to have money automatically drafted each month or every quarter.
The 529 plan, identified using the IRS code, has about a billion dollars in assets, according to Chellis. The treasurer's office sponsors the plan, but no state or federal money is used for its operations, upkeep or promotion.
The plan is run by Columbia Management and subject to annual audits. The most recent audit conducted on the 2008 fiscal year showed no issues, according to the treasurer's office.
The Future Scholar program is separate from the S.C. Tuition Prepayment Plan, which is no longer accepting applicants and running a $64 million deficit.
South Carolina's Future Scholar program was ranked seventh in the country for its performance by the Web site www.savingforcollege.com, a subsidiary of Bankrate Inc. Chellis said the state's plan is consistently ranked among the nation's top 10.
Blake Buchanan of Columbia and his wife, Ashlee, opened an account for their son, Connor, who is almost 2 years old.
Buchanan said it gives him and his wife peace of mind. Connor's parents both have a master's degree.
"We felt like it was the right thing to do to try to save the money now," Buchanan said. "Rather than try to save it now in our bank account, we put it in their hands and let it be managed by someone else and let it grow."
If a child with a savings plan does not attend college, Chellis said there are provisions in place, including transferring the money to another family member without any penalty.