RESTON, Va., July 8, 2009—Sallie Mae and its affiliate Upromise Investments, the leading administrator of 529 college savings plans, today announced their support of findings put forth in a new white paper proposing new ideas for encouraging saving for college. The paper, “Improving Access to Higher Education by Promoting Savings: private and public sectors share responsibility for promoting financial literacy and providing solutions to increase savings opportunities,” is available at www.salliemae.com/
savingsconsortium.

The white paper communicates ideas generated at a March 2009 Summit on Saving for Higher Education, which invited perspectives from financial services, state government, financial aid and higher education. Together, these individuals from varying backgrounds outlined current challenges and offered recommended action including:

• Removing 529 savings from the Free Application for Federal Student Aid (FAFSA), thereby eliminating the perception that families are penalized for investing in the plans.
• Providing incentive for employers to offer 529 plans as part of benefits packages by passing legislation to allow nontaxable employer matching contributions.
• A campaign of Public Service Announcements, serving as a low-cost, high-impact initiative to significantly boost awareness and adoption of 529 plans.

“The collaborative spirit behind both the summit and the white paper was a clear sign that concerns around saving for college touch every region of our country,” said Liz Robinson, vice president at Upromise Investments and co-author of the white paper. “Issues, such as a general lack of understanding about 529 plans, present significant and unnecessary challenges—especially to families of lower and middle income. We will continue to partner with other stakeholders to bring more ideas and actions forward to help families overcome these hurdles and gain a better understanding of the benefits of saving for college.”

The need for the paper’s calls to action are supported by findings from a national study of parents of children under age 18 released by Sallie Mae and Gallup on May 29, 2009 (529 College Savings Day). “How America Saves for College” found that while the nation’s personal savings rate has risen to its highest level in six years, college savings remains comparatively flat.

The study also found the following:

• Although 62 percent of parents save using a variety of methods, only 21 percent of parents are benefitting from the tax-advantaged opportunities of a 529 college savings plan, and only 9 percent are using a rewards program to earn additional savings for college.
• Overall familiarity with 529 plans is low: only 12 percent of parents who do not use a 529 plan say they are very familiar or somewhat familiar with 529 plans, and more than one-half (56%) have no familiarity at all.
• For college savers, lack of knowledge about 529s is a frequently cited barrier to using a 529 plan. For example, 27 percent of parent savers said they don’t have enough information; 14 percent said 529 plans seemed complicated; and 13 percent are worried that they could lose their money if their children’s plans changed.

For more information on saving, planning and paying for college, visit www.salliemae.com.

For more information contact:
Erica Eriksdotter (703) 984-5628