Sallie Mae Encourages Parents to Make a Commitment to Save for College During September’s National College Savings Month

Published on Thursday, 02 September 2010 11:17 Written by TradersHuddle Staff

RESTON, Va-( Business Wire )-

Parents overwhelmingly agree that a college degree is more important now than ever, yet few have a plan on how to pay for it, according to research conducted by Sallie Mae and Gallup. Sallie Mae, the nation’s saving, planning and paying for education company, encourages parents to make a commitment to save for college and recommends several tips to meet the challenge.

“Parents, have a choice – pay interest on college loans, or potentially earn it on college savings,” said Albert L. Lord, CEO. “We want to help families of all income levels save responsibly. Even saving little by little now can make a big difference by the time the college tuition bill is due.”

As children head back to school, Sallie Mae urges parents to use these tips and tools to get back to saving for their child’s college education during September’s National College Savings Month.

· Build a plan. First, understand the full cost of college and build a plan to save for it. Sallie Mae’s free Education Investment Planner helps calculate future college costs and an age-based estimate how much to save. Families can create a savings goal and set up automatic deposits of $25 or more each month or deposit money annually as budgets allows.

· Saving isn’t taxing when you use a 529 college savings plan. 529 college savings plans are tax-advantaged ways to save for college. Most 529 plans are sponsored by a state and many offer a state tax incentive or other benefits to residents. Family members can enroll in any 529 plan, regardless of the state of residence, and the account is easily transferrable to another beneficiary who is a family member (as defined in federal tax code) without taxes or penalties. Earnings grow free of federal income taxes as long as withdrawals are used for qualified education expenses, and many states offer residents a tax break or matching grants for investments made.*

Contributions to a 529 can be up to $13,000 for a single person or $26,000 for a married couple filing jointly in a single year without incurring a gift tax. An individual can also make a five year contribution at one time for $65,000 if single or $130,000 if married and filing jointly to a 529 plan account beneficiary without incurring gift taxes in most circumstances.

· Get by with a little help from your (family and) friends. Grandparents, aunts, uncles and friends can open a 529 college savings plan on behalf of a future student or, in most circumstances, contribute directly to an existing 529 account. Upromise Investments account holders can easily encourage family members and friends to contribute a gift of college savings through Ugift. Since 2008, more than $12 million has been gifted using Ugift.

· Put your employer to work. Check your benefits at work as many companies offer employees the ability to contribute to a 529 plan through ongoing payroll deduction. If not, talk to them about providing company-wide education and a benefit to help employees contribute to a 529 plan through payroll deduction.

· Bank on it: Most parents save for college using two to three savings vehicles. FDIC-insured high-interest savings accounts and Certificate of Deposit accounts from Sallie Mae are low-risk investment options with competitive interest rates, no monthly fees and no minimums. In addition, the High-Yield savings accounts offer the ability to earn extra Upromise rewards to bolster your savings.

· Saving is rewarding with Sallie Mae’s Upromise: Earn extra money for college through Upromise. Joining Upromise is free and rewards members for eligible everyday spending with hundreds of participating merchants or making purchases with the Upromise World MasterCard. During the month of September, more than 200 online participating merchants such as Gap.com, HomeDepot.com and Sears.com will increase contributions. Earnings can be invested in certain tax-deferred 529 plans, deposited in a high-yield savings account, used to pay down an eligible student loan; or simply used for college or other expenses. Even friends and family can sign up to help.

· Kids’ contributions are meaningful: Kids as young as school-aged can contribute to their future by setting aside money from a weekly allowance for college. For older kids, suggest depositing money earned baby-sitting, from summer jobs or working part-time into their college savings account. Not only will it add up over time, but also will it be a weekly reminder of the child’s goal to attend college and teach an important lesson on saving.

*Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

When you invest in a 529 college savings plan you are purchasing municipal securities whose value will vary with market conditions. Investment returns are not FDIC insured, and carry no bank guarantee, and you could lose money by investing in a 529 college savings plan.

For more information about 529 college savings plans managed or administered by Upromise Investments, Inc. call 1.877.529.2980. Investment objectives, risks, charges, expenses, and other important information are included in a 529 college savings plan's offering statement; read and consider it carefully before investing.

Before investing in any 529 plan, you should consider whether your or the designated beneficiary's home state offers a 529 plan that provides its taxpayers with state tax and other benefits that are only available through the home state's 529 plan.

SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is the nation’s leading saving, planning and paying for education company. Sallie Mae’s saving programs, planning resources and financing options have helped more than 31 million people make the investment in higher education. Through its subsidiaries, the company manages $184 billion in education loans and serves 10 million student and parent customers. In addition, the company’s Upromise program has enabled 12 million members to earn more than $550 million in rewards to help pay for college, and its affiliate Upromise Investments, Inc. manages more than $26 billion in 529 college-savings plans. Sallie Mae offers services to a range of institutional clients, including colleges and universities, student loan guarantors and state and federal agencies. More information is available at www.SallieMae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

for Upromise by Sallie MaeDebby Hohler, This e-mail address is being protected from spambots. You need JavaScript enabled to view it.