New options enhance state's college services plan
Cape Gazette
Editorial by Jack Markell
April 27, 2001
To help Delaware parents prepare and save for the rising cost of a child's future college education, new enhancements to the Delaware College Investment Plan will offer families increased investment choice and flexibility, as well as the opportunity to add reward dollars earned from retail purchases to potentially accelerate their savings.
Beginning later this month, Delaware College Investment Plan account holders will be able to customize their college investing strategy with the addition of two new portfolios and the flexibility choose from among eight aged-based portfolios already offered as part of the plan.
Account holders will also have the opportunity to accelerate their savings by adding reward dollars to their Delaware College Investment Plan accounts earned through purchases made within the Upromise savings network.
Today's parents know that a college education plan can play a critical role in their children's future success.
The challenge for parents is to develop an effective college savings plan that will meet their family's individual needs.
These new investing and savings options will enable Delaware families to use the Delaware College Investment Plan to build a customized college savings strategy and find new ways to add to their regular savings.
Choice of investments allows greater flexibility. The Delaware College Investment Plan enhancements will offer families the opportunity to customize their college investment strategy by providing flexibility to choose from two new portfolios - 100 percent equity portfolio and 70 percent equity portfolio - and among eight existing age-based portfolios of Fidelity Investments mutual funds.
Currently, contributions to the plan are automatically invested in one of eight age-based portfolios, primarily in equities, while the child is young and the investment has time to grow and compound.
As the child approaches college age, when funds will be withdrawn for qualified college-related expenses, the investment shifts to a more conservative allocation, emphasizing bond and money market funds.
In addition, to the age-based portfolios, investors now have three more options for future contributions.
Current regulations prohibit account participants from transferring assets among portfolios.
Participants may direct future contributions to a different mix of portfolios at any time as an investment strategy changes. Account participants may do the following:
- target the particular age-based portfolio in which they would like to invest,regardless of the child's age;
- choose from two static portfolios - 100 percent equity and 70 percent equity portfolios - and divide contributions between them; or
- combine these strategies to supplement an age-based portfolio with contributions to one of the static strategy portfolios to increase or decrease equity exposure.
According to Eric Nottonson, vice president of Fidelity Investments, which manages the Delaware College Investment Plan, thousand of account holders, currently use the Delaware College Investment Plan's popular age-based portfolios and Fidelity Investments expect parents to continue to rely on this strategy to keep their college savings on track, even during stock market changes.
He said additional equity investment choices and flexibility in the portfolios will also allow Delaware College Investment Plan account holders to take advantage of a longer investing horizon, suitable for students who elect to postpone college or others who plan to attend graduate school.
Upromise college savings network helps families accelerate savings.
In yet another step toward making it easier for families to save regularly and effectively for college, Fidelity has partnered with Upromise to offer its college savings accelerator service to Delaware College Investment Plan account holders, beginning later this summer.
Through Upromise, leading companies will automatically contribute a percentage of an enrolled customer's spending on commonly purchased consumer items, which can be directed to a Delaware College Investment Plan account to complement families' regular savings.
Families can further increase their college savings by creating a network of relatives and friends who direct their Upromise company contributions to that child's education savings.
The Delaware College Investment Plan, sponsored by the state of Delaware and managed by Fidelity Investments, is a 529 college investment plan that offers a tax-advantaged way to save regularly and effectively to meet and potentially beat college inflation and pay for college-related expenses at accredited colleges and universities nationwide.
Editor's note: Jack Markell is the state treasurer. For more information about the Delaware College Investment Plan, families and relatives may call 800-544-1655 to speak to a Fidelity representative or visit www.fidelity.com/delaware.
For more information on how to accelerate college savings through Upromise.
