Transcripts

MARTIN MOYLAN: You can get a good read on parents college savings efforts by looking at so-called 529 plans. They're a very popular vehicle for college savings. Money put into 529 plans grows tax-free. About a third of parents use them.

RENEE HILL: We do see a downturn in contributions coming in, which we expect in a market that we have today, especially with the job market.

MARTIN MOYLAN: Renee Hill is the program manager for Minnesota's 529 plan known as the Minnesota college savings plan. She says in the final three months of last year, for instance, contributions fell by nearly one quarter from the same period in 2006. That's a drop of about $8 million. Hill sees a very encouraging sign, though, even as contributions slip.

RENEE HILL: Parents and grandparents continue to open up accounts to save for their child's or grandchild's education.

MARTIN MOYLAN: The number of kids signed up for the Minnesota 529 plan is soaring, even in this economy. In the past two years, enrollment has risen about 1/5 to 51,000. The kids elders for the most part, though, just aren't kicking in as much money as they once did. Joe Chambers of Northfield is bucking that trend. She's been able to keep up contributions to her daughter Lizzy's plan, and chambers hopes to continue to hit that target.

JOE CHAMBERS: As long as I have my job.

MARTIN MOYLAN: Chambers is listening to her investment advisors counsel about buying stocks while they're down.

JOE CHAMBERS: He said to buy now is the best thing to do because you're getting more shares now.

MARTIN MOYLAN: But chambers doesn't have a lot of time to make up for the hit her daughter's 529 account has taken. Her daughter is a sophomore at the University of Minnesota.

JOE CHAMBERS: What's hard is that she's not five years old. We're right in the thick of it. So I am sort of gambling.

MARTIN MOYLAN: For now, chambers is tapping other resources in savings, hoping the 529 account will bounce back before she has to tap it. Bridget Freed started a 529 for her high school son, Devon, in 2001 when he was an elementary school. A few years later, she had to cut her contribution by nearly 2/3. Her pay fell after her employer was acquired by another company, and Freed had to edge her way back to her old salary. Her investments in the 529 plan lost as much as half their value at one point. But Freed is still optimistic about covering much or most of her son's college expenses. Freed wants him to be able to study what he wants without worrying about how marketable his degree may be.

BRIDGET FREED: My initial goal was to be able to offer my son this experience where he could study what he wanted to without this looming, "what am I going to do with it, what are you going to make-- how are you going to make money" concern while he's doing an undergraduate course of study.

MARTIN MOYLAN: To maximize her college dollars, Freed is encouraging her son to consider public universities, and she's expecting he'll be able to pick up a good number of college credits before he leaves high school. He'll be taking advantage of advanced placement tests and the college in the schools program.

BRIDGET FREED: He definitely will take advantage of any opportunities to walk in as a freshman with as many college credits as he can.

MARTIN MOYLAN: Earning college credits while in high school can save students and their parents tens of thousands of dollars, and that can be critical to financing a college degree these days. Martin Moylan, Minnesota Public Radio News.