The CollegeSure CD
The CollegeSure CD is a variable rate certificate of deposit indexed to college costs and designed to meet the future cost of college. CollegeSure CDs are issued exclusively by College Savings Bank.
- acts like a college cost prepayment product. It pays an annual percentage yield tied to the rise in college costs.
- s safe. Principal and interest are FDIC-insured to at least $250,000 per depositor. On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009.
- has also been awarded Standard & Poor's highest credit rating.
- free of enrollment fees or other management charges that may erode your return on investment.
- tax-advantaged. Your earnings grow tax free and when the time comes to use the money for college, earnings distributed to pay qualified higher education expenses are also income tax free.
- tax-deductible for Montana residents. Deduct the amount of your contributions from Montana taxable income up to $3,000 per taxpayer ($6,000 for married couples filing jointly).
- tax-deductible for Arizona residents. Deduct $750 from gross income per taxpayer, or $1,500 for those married, filing jointly - based on contributions to the Arizona Family College Savings Program.
- Also tax-deductible for residents of Maine, Kansas, Pennsylvania and Missouri
- affordable with multiple deposit options. You can mail deposits of as little as $250, or enroll in direct deposit. Direct deposits from your bank or brokerage account start as low as $100 a month. Payroll direct deposits are as little as $25 a pay period.
- flexible with maturities ranging from 1 to 22 years.
- indexed to the rising cost of college. 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 last ten years, the college inflation rate has averaged more than 5.00% a year. Over the one-year period ended July 31, 2008, the college inflation rate was 5.49%.
- designed for families that already know what is important. Unlike the CollegeSure CD, many other college investments can lose value and leave your child’s college education underfunded.
Under the current terms, the CollegeSure CD earns an annual percentage yield (APY) over the life of the investment that is 3.00% less than the college inflation rate. On July 31, 2008, college inflation, as measured by the College Board’s Independent College 500® (IC 500) Index, was 5.49%.
Each CD deposit of $250 or more is measured in terms of "units." Units are a measure of how much college you've prepaid so that you can keep track of your progress. One unit, at maturity, is equal to one full year's average tuition, fees, room and board at a four-year private college as measured by the Independent College 500® Index (IC 500).
The purchase price per unit exceeds the value of the IC 500 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. Over the term to maturity of each CollegeSure CD, the APY is not less than the college inflation rate less 3.00%.
Earnings in College Savings Bank's 529 Plans grow tax free, and distributions to pay qualified higher education expenses are tax free. Investors in the 28% federal tax bracket will earn the taxable equivalent of a 3.46% APY over the life of the investment if college inflation remains the same. If college inflation increases to 7.00%, which is about the average college inflation rate over the past 30 years, the taxable equivalent is 5.56%. If college inflation drops to 5.00%, taxable equivalent earnings are 2.78%.
According to the U.S. Census, in 2004 the average weekly income of a college graduate was 80% higher than a high school graduate. In addition, the high school unemployment rate was 5.5% in 2003 while those with a Bachelor’s Degree were unemployed at only a 3.3% rate. Over a 40-year career the difference in earnings can be as much as $1.70 million between a high school graduate and a college graduate assuming a 3% annual salary increase.
Save for a child's entire education or just a portion. It's up to you. CollegeSure CDs are available in maturities from 1 to 22 years so you can time your CDs to mature the years your child will attend college or graduate school.
*For complete details on the CollegeSure CD review the Terms and Conditions (pdf).
Open a CollegeSure CD account online today.