Innovative Ideas & Solutions

Joseph HurleyVice-President, Bankrate Inc.

Founder, Savingforcollege.com

College Savings & Financing Summit 2008Washington, D.C.

May 21, 2008

Age-based 529: Average annual performance 2003-2007 for each age interval. Savingforcollege.com, April 2008.

Tuition: 5.6% average annual increase at 4-year private colleges, 2002-03 through 2006-07. The College Board, Oct 2007.

0

2000

4000

6000

8000

10000

12000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Age (years)

Val

ue ($

)

$1,500

$9,575

$4,000

Age-Based 529

Tuition

Projected growth of age-based 529 account vs. tuition

States offering a tax deduction or credit for 529 contributions

In-state only

In-state and out

No income tax

States with a 529 matching contribution program tied to income level

Creditor protected

Cred & Medicaid Protected

States with laws protecting 529 accounts from creditor claims

How concerned are you that saving for college will impact your child's future financial aid eligibility? (Apr 2008)

3%

6%

26%

51%

13%

0% 10% 20% 30% 40% 50% 60%

Other or don't know (18)

Not concerned, see no impact (32)

A little concerned, but important to save (137)

Very concerned, yet still saving (267)

Extremely concerned. Saving doesn't makesense. (67)

Saving for college and its impact on future financial aid eligibility

Are parents concerned?

Should the federal government do more to rein in college cost inflation? (Nov 2007)

4%

10%

29%

18%

48%

0% 10% 20% 30% 40% 50% 60%

Other or don't know (19)

Fed gov't should provide education at no cost (54)

No, focus on financial aid instead (107)

Yes, place high-cost colleges on public list (95)

Yes, enact price controls or penalties (249)

Should the federal government do more?

What is your investment objective in saving for college? (Sep 2007)

5%

16%

18%

61%

0% 10% 20% 30% 40% 50% 60% 70%

Other or don't know (29)

Avoid any risk, even ifcollege costs increase

faster (88)

Simply keep pace withcollege costs (102)

Maximize returns inhope of outpacing

college costs (341)

Investment objectives in saving for college

Would you postpone your retirement by two years if it meant your child attending the college of choice without taking on more debt?

(Jul 2007)

4%

9%

6%

80%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Other or don't know (29)

No, my child can find acheaper school (63)

No, I would just take outmore loans (43)

Yes, if possible for me(553)

Postponing retirement to avoid further debt?

Do you use your home-state 529 plan or an out-of-state 529 plan? (Mar 2007)

7%

12%

48%

34%

0% 10% 20% 30% 40% 50% 60%

I don't know if my 529plan is my home state's

(58)

I use both in-state andout-of-state 529 plans

(96)

I use an out-of-state 529plan (399)

I use my home-state529 plan (280)

Home-state 529 plans vs. out-of-state

How do you allocate your savings between retirement plans and college savings plans? (Apr 2006)

2%

4%

45%

49%

0% 10% 20% 30% 40% 50% 60%

Other or don't care (18)

College savings is higher priority; I'll worry aboutretirement later (42)

I'll put some $ into a 529/ESA even if I'm notmaxed out on 401k/IRA (443)

I'll max out my 401k/IRA before putting $ into529/ESA (485)

Allocation of savings between retirement and college savings

How likely is it that you will attend college or graduate school classes, on campus or online, at any time in the future? (Feb 2006)

24%

9%

15%

52%

0% 10% 20% 30% 40% 50% 60%

Highly unlikely (66)

Somewhat unlikely (25)

Somewhat likely (43)

Highly likely (146)

Likeliness of attending college or grad school in the future

Should the states be removed from the 529 plan business? (Dec 2005)

8%

16%

33%

43%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Don't know or don't care(51)

No, keep the states incharge (94)

No, but allow financialinstitutions to offer 529

plans too (200)

Yes, ban them entirely(259)

Should the states be removed from the 529 plan business?

Which would you choose - 529 or ESA - if you had $2,000 to save for college? (Oct 2005)

5%

35%

60%

0% 10% 20% 30% 40% 50% 60% 70%

Neither (58)

Coverdell ESA (442)

529 Plan (762)

529 vs. ESA

Which would you choose - 529 or ESA - if you had $2,000 to save for college? (Oct 2005)

5%

35%

60%

0% 10% 20% 30% 40% 50% 60% 70%

Neither (58)

Coverdell ESA (442)

529 Plan (762)

Should states be required to open up their 529 deductions to out-of-state 529 plans? (Jul 2005)

3%

11%

86%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Don't know or don't care(23)

No (104)

Yes (793)

Should states be required to open up their 529 deductions to out-of-state plans?

Prescription for Savings

Get financial aid administrators up to speed on 529s and ESAs

Clarify and simplify the tax law

Allow tax-free repurposing of 529 funds

limited rollover to a Roth IRA

donation to a 501(c)(3) scholarship program

Thank You!

Joe Hurleyjhurley@savingforcollege.com