Virginians investing more in college savings plan, agency says

RICHMOND — Virginia families are saving more for their children’s college education, according to the Virginia529 College Savings Plan.

About $479 million was invested during fiscal year 2013 in three Virginia 529 savings programs, the agency reported Wednesday.

That’s up from $424 million, an increase of 13 percent, over the amount families saved for college the previous year. Improving economic conditions and growing concerns about student loan debt were credited for the increase, in addition to extensive marketing of the state plan.

Virginia529 is the state agency that oversees the programs, which are named for the Internal Revenue Code that makes earnings in the accounts tax-free.

More students also withdrew money from their accounts to pay for college expenses. The agency distributed nearly $250 million in fiscal 2013, also a growth of 13 percent.

Nearly half, or 49 percent, of distributions went directly to Virginia public schools.

Virginia Tech received $24.3 million, the highest distribution made by the plan. The University of Virginia was second at $20 million, and James Madison University was third at $13.5 million. Rounding out the top five were Virginia Commonwealth University, which received $12.2 million, and the College of William and Mary at $10.6 million.

The agency’s oldest program, the prepaid option that lets families purchase a contract for specific amounts of tuition, saw a 3 percent decline in contributions from the previous year.

The prepaid program received $129.38 million in contributions in fiscal 2013, compared with $132.7 million in 2012.

Contributions to the inVest program, which is similar to a 401(k) retirement plan in its flexibility, rose from $270.4 million to $319.3 million, Contributions to CollegeWealth, an FDIC-insured savings account that is considered the most conservative of the investment options, increased from $20.9 million to $30.6 million.

The figures do not include a fourth option, CollegeAmerica, which is a national program sold through financial advisers.

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