Here's the actual text of the email:
Dear Account Owner:
Especially in this economic recession, the Pennsylvania 529 Guaranteed Savings Plan (GSP) remains one of the best ways for families to save for college. Unlike most other savings options, the GSP is designed to protect your principle investment from market fluctuations while keeping pace with tuition inflation. GSP accounts also provide significant state and federal tax advantages, and do not affect a student’s eligibility for state financial aid. Assets held in GSP accounts are protected by state law from creditors.
Like nearly all investments, including 529 plans across the country, the GSP has suffered losses caused by the recession. These losses have resulted in the GSP’s liabilities exceeding its assets. While many other states have closed their prepaid college savings programs in the face of similar financial challenges, I intend to preserve – and strengthen – the GSP. My goal is to mend, not end, this valuable and important program and make it viable over the long-term.
To help ensure that the GSP can meet its obligations to you and other families, we are required to operate the program in a way that is designed to maintain its financial soundness. To fulfill this responsibility, we have made certain changes to the fees associated with the program.
As you know, the GSP sets new credit prices at the start of each academic year based on new tuition rates at higher education institutions. This year, we have determined that we must also reevaluate and reconfigure the GSP’s annual fee. Starting October 1, the $25 account maintenance fee will be eliminated and an annual asset-based fee of less than one-half of one percent - specifically 0.49% ($4.90 per $1,000) - of the value of your account if used for qualified higher education expenses will be assessed. This fee structure is similar to that of many other investments, such as mutual funds, but the rate is lower than many. Please see the enclosed supplement to the GSP Disclosure Statement for more details.
Another measure we must take now to strengthen the GSP is to reinstitute premiums for some of the college savings tuition levels. However, for most tuition levels, they are lower than premiums imposed in the past. These are charges in addition to today’s actual tuition costs. Premiums are necessary to ensure that GSP Credit Rates are adequate to cover future tuition increases. These premiums will apply only to new contributions made after August 31, 2009. The enclosed chart shows the GSP Credit Rates, including premium charges for the 2009-10 academic year for the most popular tuition levels.
Please know that I made none of these decisions lightly. I appreciate how significantly these changes may affect your family’s savings decisions, but I assure you they are necessary to meet the GSP’s obligations for the families, like yours, who are depending on it.
You can avoid the higher credit prices by making a contribution to the GSP by August 31, 2009, before the new rates, including the premium charges, take effect. Contributions sent by mail must be postmarked by August 31, and online contributions must be made by 11:59 p.m. EST at www.MakeCollegePossible.com.
If you would like additional details about the GSP or any of the changes outlined in this letter, please go online or call one of our customer service representatives at 1-800-440-4000. They are available Monday through Friday from 8:00 a.m. to 6:00 p.m. to answer any questions you may have.
Thank you for your continued support of the GSP.
Yours with appreciation,
Unfortunately I'm unable to cut and paste the chart that shows the detailed figures such as the 8% premium at PSU and Pitt. I can paste the table into Wordpad, but I'm not adept enough to get it in here.
I have about $75K for each of my 3 kids in Penn State/Pitt tuition credits. Two are in private colleges and the third in HS. I need to find out if transferring money between kids or moving money between colleges kick up any fees - previously they didn't.