Maryland Prepaid College Trust
Frequently Asked Questions
Why should I consider the Maryland Prepaid College Trust?
Because by enrolling in the Prepaid College Trust now, you are locking in tomorrow’s college education for your child at today’s prices.
Despite four years of tuition freezes at most Maryland public four-year colleges from 2006 - 2009, Tuition increases from 2002-2012 at four of the larger Maryland public colleges are:
University of Maryland College Park 54%
University of Maryland Baltimore County 46%
Towson University 48%
Salisbury University 60%
More than one-half of students who are currently attending college and using their Prepaid College Trust Accounts are attending private or out-of-state colleges. Tuition increases from 2000-2010 at four of the private and out-of-state colleges that are among the most popular for our students are:
James Madison University* 96%
Stevenson University 98%
Penn State University* 61%
University of Delaware* 88%
*Non-resident Tuition increases
With the Prepaid College Trust, you can purchase tuition and mandatory fees for either 1 semester or 1, 2, 3, 4, or 5 years at a 4-year college; 1 or 2 years at a community college; or a combination of 2 years at a community college and 2 years at a 4-year college. The Prepaid College Trust will pay the full in-state or in-county tuition and mandatory fees (Tuition) at any Maryland public college, regardless of how much the cost has increased from today. If your Beneficiary selects a private or out-of-state college, the Prepaid College Trust will pay Tuition up to the Weighted Average Tuition.
To meet the future benefits, the Prepaid College Trust invests your payments based on the following projections: 1) tuition at Maryland public colleges will increase by 7% annually; 2) mandatory fees increase at a rate of 10% annually; and 3) a long-term objective of earning an average annual investment return of 7.5%. For a full list of projections and the Investment Policy, please refer to the Prepaid College Trust Disclosure Statement.
What are the fees associated with the Maryland Prepaid College Trust?
The operating expenses of the Prepaid College Trust are covered by 2.5% of Contract payments. In addition, each new Prepaid College Trust Account is charged an $75 Enrollment Fee for paper applications and a $50 for on-line applications. If you purchase additional years of Tuition for the same Beneficiary, or open an Account for a Beneficiary for whom you already have a Maryland College Investment Plan account, you pay a reduced Enrollment Fee of $20. We must receive your Enrollment Fee before your Account can be opened. A complete Schedule of Fees
(Disclosure Statement PDF) can be found on page 7.
What will the Maryland Prepaid College Trust pay when my child attends college?
The Prepaid College Trust will pay the full in-state or in-county tuition and mandatory fees (Tuition) at any Maryland public college, regardless of how much the cost has increased from today when:
What is the weighted average tuition?
- Your child (Beneficiary) enrolls in college in the future,
- At least 3 years have passed since their enrollment in the Prepaid College Trust, and
- All payments have been satisfied on the Account(s).
If your Beneficiary selects a private or out-of-state college, the Prepaid College Trust will pay Tuition up to the Weighted Average Tuition. (You would have to make up the difference, if any).
The Weighted Average Tuition is the in-state or in-county Tuition at each Maryland public college times the number of full-time equivalent in-state or in-county students enrolled at that college, added together. This total is then divided by the number of full-time equivalent in-state or in-county students enrolled at all Maryland public colleges. There is a separate calculation for the 4-year public colleges and the 2-year public community colleges in Maryland. The Board calculates the Weighted Average Tuition once each year, typically in the Fall for the following year by applying its projected increase for tuition and mandatory fees to the current year's Weighted Average Tuition.
The Weighted Average Tuitions are:
For the 2012 - 2013 academic year:
Weighted Average Tuition =
4 Year Public Colleges
For the 2013 - 2014 academic year:
Weighted Average Tuition =
4 Year Public Colleges
How does the Legislative Guarantee work?
The Prepaid College Trust is backed by a Legislative Guarantee. In the event that the Trust ever experiences a financial shortfall, Maryland law requires the Governor to include funds in the State budget to allow the Trust to pay your full benefits. As with the entire State budget, the Maryland General Assembly has final approval. For additional information, please see the section titled Prepaid College Trust Operations (Disclosure Statement PDF) on page 9.
How long does a student have to use Benefits?
A student has up to 10 years after his/her projected year of high school graduation to begin to use Benefits. In addition, any years spent in active U.S. military service are added to the 10-year limit.
Can there be two Account Holders on an Account?
No. Only one person can be named as the Account Holder when you enroll a Beneficiary. Only the Account Holder can make decisions regarding the Account such as choosing a payment option, changing Beneficiaries, etc. Only the Account Holder can take advantage of the Maryland State income deduction for payments made by the Account Holder. However, anyone can contribute to an Account.
Does the Maryland Prepaid College Trust send me an Account Statement?
The Prepaid College Trust sends an Annual Statement of Account
for each Account during the first quarter of the year. It will show your payments and any Benefits that have been paid on the Account. At any time, however, you may review your account on-line
or call our office to request an Account Statement.
Can my payments to the Maryland Prepaid College Trust ever be more than the actual benefit?
No. The Board has set a policy where Benefits from the Prepaid College Trust will not be less than payments to your Account plus a reasonable return on your payments. This reasonable return is equal to a U.S. Government Security with a constant maturity of one year minus 1.2% (but will never be less than zero). In certain instances where actual Tuition is less than payments to your Account plus this reasonable return, the difference can be used for other Qualified Higher Education Expenses such as room and board or books.
What if a Maryland state school does not offer the program I wish to study? Can I use my Maryland Prepaid College Trust in-state benefit to go out of state?
Maryland participates in a program called the Academic Common Market. In some instances a student may get in-state rates at out-of-state school through this program. Please use the following link to learn about the program and to download an application.
How does the State income deduction work for the Maryland Prepaid College Trust?
Whether or not your Beneficiary attends an out-of-state institution through the Academic Common Market, you can use your Maryland Prepaid College Trust account at nearly any college nationwide. If your Beneficiary attends an Eligible Institution that is private or out-of-state as a full-time student, the Prepaid College Trust will pay the Tuition each semester (or the equivalent) up to one half of the Weighted Average Tuition in the tuition plan you purchased or your Minimum Benefit, whichever is greater.
Currently, Maryland taxpayers receive a maximum $2,500 deduction from their State adjusted gross income annually per Account for contributions to the Prepaid College Trust. The Account Holder is the only person who can take advantage of the Maryland State income deduction for contributions he or she has made. Contributions made in excess of $2,500 per Account in a single year may be carried forward and deducted from your State adjusted gross income until the full amount contributed to the Account has been deducted, subject to the $2,500 limit. For additional information, see the section titled Certain State Tax Considerations
(Disclosure Statement PDF) on page 14.
Am I allowed to have both a Prepaid College Trust Account and another 529 Account such as the Maryland College Investment Plan?
Yes. You may have more than one 529 Account for the same Beneficiary. Complementary college savings options may be beneficial for families seeking a diversified college savings portfolio with an investment in the Prepaid College Trust that is backed by a Legislative Guarantee and an investment like the College Investment Plan.
When can I enroll a newborn?
Newborns can be enrolled anytime during the year from the date of their birth until their first birthday at prices that are in effect when the enrollment is completed. This means that prior to the start date of the 2013 - 2014 Enrollment Period, the prices in effect for newborns will be the prices of the 2012 - 2013 Enrollment Period. A newborn enrollment is completed upon receipt of a completed Enrollment Form and the applicable Enrollment Fee.
Can I accelerate my payments or pay off my Account early?
Yes, your payments may be accelerated. This can be done in one of two ways:
1) You may always pay more than your monthly or annual payment amount. This may lessen the number of monthly or annual payments you will have to make. This will not reduce the total amount of your payments.
2) You may reduce the total amount of your payments by making a single payment of at least 25% of the payoff amount.
An Account may also be paid in full at any time. To request your payoff amount, you may either send an email request to: email@example.com
or call our toll-free number, 1-888-4MD-GRAD to speak with a representative. You may also access your Account online
to obtain your payoff amount. If you obtain the payoff amount online, please print the page which shows the payoff amount, enclose it with your check and mail it to: MPCT, 217 E. Redwood Street, Suite 1350, Baltimore, MD 21202. Please include your account number and the words "payoff" on your check.
Can I use my Upromise contributions to fund my Maryland Prepaid College Trust account*?
Yes. You can withdraw funds from your Upromise account at any time during your membership. You would need to submit a letter in writing to Upromise requesting a withdrawal from your Upromise account. The letter must state your full name, account number, address, telephone number and the exact amount that you would like to withdraw, up to the total amount available in your account. Pending contributions are not eligible for withdrawal.
Upromise requires that the letter either be notarized or contain a Signature Guarantee for withdrawal requests in excess of $1,000. A Signature Guarantee is a guarantee you can obtain from a financial institution, such as your bank, that your signature is yours and that it is genuine.
If your withdrawal is under $1,000 or does not need to be notarized or contain a Signature Guarantee, you may fax the request to 617-559-2481. Otherwise you may send your letter to:
ATTN: Customer Care
P.O. Box 55555
Boston, MA 02205-5555
Checks are sent once per calendar quarter, so you should typically receive your check within 12 weeks of your request being received by Upromise. Once you have received and cashed your Upromise contribution withdrawal check, then write a check for the amount you would like to contribute to your Maryland Prepaid College Trust account.
Please make your check payable to:
Maryland Prepaid College Trust
Write your account number on the check and mail it to us at:
Maryland Prepaid College Trust
217 E. Redwood Street, Suite 1350
Baltimore, MD 21202
*This information is provided as a service to our Web site visitors. The College Savings Plans of Maryland is not affiliated with, does not endorse, and is not endorsed by Upromise.