AFCSP FAQ
What is the Arizona Family College Savings Program?
What are the income tax advantages?
Is there a contribution limit?
Who can participate?
Can others contribute to my child's account?
What is an eligible educational institution?
Does my child have to attend full time?
What happens when my child is ready to attend college?
What if my child receives a scholarship?
What if my child does not attend college?
What is a nonqualified distribution?
What if I make a nonqualified withdrawal?
Can I change the account owner or beneficiary?
Can I also contribute to a Coverdell Education Savings Account?
What about Hope and Lifetime Learning Credits?
How does this program affect financial aid?
Is this program guaranteed by the state?
How does this account affect estate tax?
Must I pay gift tax on the contribution?
Are there alternative investments available under the program?
CollegeSure FAQ
How does the CollegeSure Plan work?
Are there enrollment fees?
What interest rate will I earn?
What is a full unit?
How is the CollegeSure CD priced?
Should the CD maturities coincide with anticipated attendance at college or graduate school?
Must I select a college now?
What happens when my child is ready to attend college?
Is my money safe?
Can I obtain more than $100,000 of FDIC insurance coverage?
Are there alternative investments available under the program?
InvestorSure FAQ
How does the InvestorSure Plan work?
Are there enrollment fees?
What interest rate will I earn?
How is the InvestorSure CD priced?
What are my choices upon maturity?
Is my money safe?
Can I obtain more than $100,000 of FDIC insurance coverage?
Are there alternative investments available under the program?
AFCSP FAQ
It's a tax-advantaged program created by the state of Arizona to encourage families to save for their children's higher education. The program was established as a qualified tuition program under Section 529 of the Internal Revenue Code. The Arizona Commission for Postsecondary Education has contracted with College Savings Bank to serve as a manager of the program.
Your earnings grow tax free while you control the assets. When the time comes to use the money for college, earnings distributed to pay qualified higher education expenses are also 100% tax free.
Arizona residents may deduct from Arizona taxable income the amount of their contributions up to $750 per year single/$1,500 per year married couples filing jointly.
Yes. A contribution may not be made if it would cause the sum of all 529 accounts for the same designated beneficiary to exceed the lesser of the balance limit, currently set at $318,000 (as of 10/1/07), or the cost in current dollars of the qualified higher education expenses that the account owner reasonably anticipates the designated beneficiary will incur.
Any U.S. taxpayer, regardless of income, may establish a tax-favored college savings account for anyone - including themselves.
Yes. A person need not be an account owner to contribute to a child's account. However, Arizona residents who make deductible contributions must establish their own accounts (or jointly with spouse).
It is any institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited, public, nonprofit and proprietary postsecondary educational institutions. To find out if a specific institution is eligible, review the 2007/2008 Federal School Code database. If the institution has been assigned a federal school code by the Department of Education, then it is considered eligible under Section 529.
No. Funds can be used to pay for tuition, fees, textbooks, supplies and equipment that are required for the designated beneficiary to attend an eligible institution. If the student's enrollment qualifies for at least half-time, room and board expenses are also eligible up to a specified level.
The account owner must submit a Distribution Authorization Form.
Funds up to the amount of a qualified scholarship can be returned to the account owner without incurring the 10% federal tax penalty.
The account owner may either close the account or change the beneficiary. If the account is closed, the funds are subject to a nonqualified distribution penalty in addition to tax reporting.
Nonqualified distributions are withdrawals made for purposes other than for qualified higher education expenses. Exceptions include withdrawals relating to the death or permanent disability of the beneficiary.
The account owner may withdraw funds at any time. The account balance with earnings will be refunded. However, this refund is subject to a federal nonqualified distribution penalty equal to 10% of earnings. CD early redemption penalties may also apply.
Yes. The account owner and beneficiary may be changed to certain other family members. There is no fee for the first change of owner or beneficiary. Thereafter, a $50 fee may be imposed for each change.
If your income qualifies to make a Coverdell ESA contribution you may contribute to both the AFCSP and a Coverdell ESA for the same beneficiary, in the same year. Amounts may be withdrawn tax free from an ESA to make contributions to the AFCSP.
Participation in the AFCSP does not disqualify you from claiming the Hope and Lifetime Learning Credits if you so choose.
Program assets will be considered if the student applies for state or federally sponsored financial aid or scholarships.
If the account is owned by the parent, account balances are generally included in the asset of the parents rather than
the student. Beginning July 1, 2009, section 529 accounts owned by or for the sole benefit of the student (such as
custodial accounts) also will be treated as assets of the parents for federal financial aid calculations. (As a result of a
peculiarity in the Higher Education Act of 2005, until July 1, 2009, student owned section 529 accounts (such as in a
custodial account) will not be treated as the student's or parent's assets for financial aid purposes.) Section 529
account distributions that are not included in taxable income are not treated as student or parent income for purposes
of federal financial aid calculations. An account owner should check the applicable rules for financial aid programs
and scholarship programs before withdrawing funds to pay qualified higher education expenses.
Under Arizona law, a student loan program, student grant program, or other financial assistance program
established or administered by the State of Arizona or a financial assistance program administered by a college or
university supported by the State of Arizona must treat the balance in an account as an asset of the parent of the
designated beneficiary and not as a scholarship or grant or as an asset of the student for determining a student’s or
parent’s income, assets or financial need. However, this rule does not apply if it is inconsistent with requirements of
federal law or a specific grant establishing a financial assistance program.
No. The program is not guaranteed by the State of Arizona.
For purposes of federal estate tax, the value of an account generally will not be treated as part of the taxable estate of an account owner who is not a designated beneficiary.
No. Account owners can make annual gifts of up to $12,000 single and $24,000 joint to a designated beneficiary for all accounts without incurring federal gift tax. For contribution over the limit, you may treat the money (up $60,000) as having been made ratably over a five-year period.
Yes, however the CollegeSure CD and InvestorSure CD are only available from College Savings Bank.
CollegeSure FAQ
The CollegeSure CD is an affordable investment available through the Arizona Family College Savings Program (AFCSP). It's a certificate of deposit indexed to college costs, guaranteed to meet future tuition, fees, room and board - and backed by the full faith and credit of the U.S. Government to at least $100,000 per depositor.
Each year it pays an annual percentage yield tied to college inflation, as measured by the change in the College Board's Independent College 500 (IC500) Index. It allows you to prepay college costs today at a fraction of tomorrow's prices. And, the CD provides an attractive 2% floor rate for added protection.
Deposits of as little as $250 purchase CollegeSure CDs while direct deposits of as little as $100 a month or $50 per pay period will accrue interest in an Accumulator Account. CDs will automatically be purchased each time your Accumulator balance reaches $250. For each CollegeSure CD purchased you'll receive a confirmation notice. And, each July 31 you will receive an annual statement detailing account balances, transactions and earnings that occurred during the year. Direct deposit customers will also receive quarterly statements after October 31, January 31 and April 30.
Twice a year you'll receive a complimentary newsletter designed to help you make the most of your account and keep you apprised of current college savings issues. (view previous newsletters)
No. There are no enrollment fees.
You'll earn an interest rate tied to the year-to-year increase in college costs. The interest rate adjusts each July 31. The annual percentage yield (APY) over the term of each CollegeSure CD is not less than the college inflation rate less a 3.00% margin. For the past twenty-five years, the annual college inflation rate has ranged from a high of 14.35% to a low of 4.24%. For the year ended July 31, 2008, the college inflation rate was 5.49%. (historical interest rates)
Units are simply a measure of how much college you have prepaid. One unit, at maturity is equal to one full year's average tuition, fees, room and board at the average four-year private college as measured by the IC500. Based upon 2005 data, .44 units prepays about one year at the average public college (in-state). About 1.28 units prepays one year at the average Ivy League college.
The purchase price per unit exceeds the value of the IC500 at the deposit date. For example, if today's cost for 10% of one year of private college is $3,720, you would deposit $5,736 to purchase .10 units of a CollegeSure CD for your three-year old child to guarantee the future cost of college in fifteen years. At maturity you'll receive 10% of one year of whatever private college costs are in fifteen years, no matter how high college costs rise.
Yes. Maturities are available from one to 22 years. You must time your CDs to mature the years your child attends college and/or graduate school. In most cases, CDs are subject to early redemption penalties for withdrawals prior to maturity.
No. Simply begin making deposits and on each confirmation notice we'll report how much college you've prepaid. If you'd like to target a specific college, just call 1-800-888-2723 and we'll tell you approximately how many units you'll need for that institution. But remember, participation in the AFCSP does not guarantee admission to any institution. Click here for a complete list of colleges in the IC500.
What happens when my child is ready to attend college?
The account owner must submit a Distribution Authorization Form.
Yes. Principal and interest are backed by the full faith and credit of the U.S. Government to at least $100,000 per depositor. The CollegeSure CD also has been awarded Standard & Poor's Corp's highest rating.
Yes. A child with two parents and four grandparents can obtain up to $600,000 in FDIC insurance with properly structured accounts (see Disclosure Statement for details). For assistance, call 800-888-2723.
Yes, however the CollegeSure CD is only available from College Savings Bank.
InvestorSure FAQ
The InvestorSure CD is a variable rate certificate of deposit indexed to the Standard & Poor’s 500 Composite Index and FDIC insured to at least $100,000 per depositor. Unlike many investments, the InvestorSure CD does not risk principal.
Should the value of the S&P 500 decline over the investment period, you will receive your full investment back at maturity. Investments held to maturity will also receive at least 85 percent of the average increase in the S&P 500 based on a formula. InvestorSure CDs are issued exclusively by College Savings Bank.
While historical rates of return are never a guarantee of future performance - if the InvestorSure CD was available, the previous 80 maturing CDs (ending May 2008) would have produced an average annual percentage yield (APY) of at least 5.40%.
Deposits of as little as $1,000 purchase InvestorSure CDs while mail in deposits of as little as $500, direct deposits of $250 a month or more or $100 per pay period will accrue interest in an InvestorSure Accumulator Account. CDs will automatically be purchased if your Accumulator balance exceeds $1,000 on a CD issue date. For each InvestorSure CD purchased you'll receive a confirmation notice. And, each July 31 you will receive an annual statement detailing account balances and transactions that occurred during the year. Customers will also receive quarterly statements after October 31, January 31 and April 30.
Twice a year you'll receive a complimentary newsletter designed to help you make the most of your account and keep you apprised of current college savings issues. view previous newsletters
No. There are no enrollment fees.
You'll earn an interest rate tied to the average increase in the S&P500 and based on a formula. The chart on the InvestorSure page illustrates the historical average annual percentage yield for each InvestorSure CD issued during the time periods noted.
Each InvestorSure CD pays a participation rate that is between 85-100% of the average increase in the S&P500 from issue date to maturity and based on a formula. The exact participation rate of each CD will not be determined until the day the CD is issued. As an investor, you should assume that the rate is 85% when making your investment decision.
College Savings Bank uses a complex formula to determine the participation rate and it requires data only available on the day of issue. While the Bank will always strive to offer the InvestorSure CD at 100% of the S&P500, it is not reasonable to assume this can be done for every issuing of the CD.
The Bank will provide written notification to investors at least 60 days before the Maturity Date. The Account Owner must provide the Bank written instructions at least 30 days prior to the Maturity Date if it desires the proceeds upon Maturity to be invested other than in accordance with the default actions described below. If the Bank does not receive such instructions, the Bank will take one of the following Default Actions:.
- If the beneficiary’s date of entry into college is five years or more after the Maturity Date, the Bank will transfer the matured funds to a new InvestorSure CD issued under the then current terms and conditions for issuing InvestorSure CDs (if the Bank is continuing to issue InvestorSure CDs under the Program);
- If the beneficiary’s date of entry into college is more than one year and less than five years after the Maturity Date and the Bank is still offering the CollegeSure CD under the Program, the Bank will transfer the matured
funds to a CollegeSure CD with a maturity date of July 31 preceding the expected year of matriculation under the then current terms and conditions applicable to CollegeSure CDs; and
- If the beneficiary’s date of entry into college is one year or less after the Maturity Date (or neither of the two
preceding options applies), the Bank will hold the matured funds in an InvestorSure Accumulator Account until
the funds are required for qualified higher education expenses at an eligible educational institution, or until the
Account Owner is permitted to and does provide other permitted investment instructions.
At Maturity, the matured funds will be applied using one of the Default Actions, unless the account owner chooses one of the following pursuant to written instructions:
- Transfer the matured funds to a CollegeSure CD (if the Bank is continuing to offer CollegeSureCDs under the Program)
- Re-invest the matured funds in another InvestorSure CD under the then current terms and conditions (if the Bank is continuing to offer InvestorSure CDs under the Program);
- Roll over the matured funds to another 529 plan investment;
- Hold the matured funds in the InvestorSure Accumulator Account; or
- Withdraw the funds.
Yes. Principal and interest are backed by the full faith and credit of the U.S. Government to at least $100,000 per depositor. The InvestorSure CD also has been awarded Standard & Poor's Corp's highest rating.
Yes. A child with two parents and four grandparents can obtain up to $600,000 in FDIC insurance with properly structured accounts (see Disclosure Statement for details). For assistance, call 800-888-2723.
Yes. For more information call 800-888-2723 or visit our product page.