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Missouri tuition savings plan continues to gain members after Sept. 11

October 12, 2001
By: Robert Sandler
State Capital Bureau
Links: www.missourimost.org

JEFFERSON CITY - Missouri's college tuition savings plan is continuing to gain members even after the drop in the stock market and the Sept. 11 terrorist attacks.

The program, called Missouri Saving for Tuition, allows members to deposit money to be used for their children's college tuition, earning interest free from state income tax. When the money is withdrawn, it can be used at nearly any college or university in the country.

Participants choose one of three plans, investing in stocks, guaranteed savings, or a combination of the two called managed allocation.

As of Oct. 5, more than 3,700 people had invested over $11 million in the stock equity option. It has lost 15.7 percent of its value for this year through Aug. 31. Because all of that money is invested in the stock market, it is considered more risky than the other plans and may gain or lose value, according to Chuck Miller, chief of staff for Missouri State Treasurer Nancy Farmer.

Miller could not say Friday how much actual money had been lost. He expects the value to rise when the stock market begins to rise again, he said.

The managed allocation option, which has over 12,000 accounts and $42 million invested, is also losing money as well. This option invests different levels of money in stocks and guaranted savings based on the age of the beneficiary, so the Treasurer's Office does not know how much money has been lost.

Money invested in the guaranteed option still earns interest at the fixed rate of 5.45 percent. The rate cannot be lowered until July 1, 2002, but may be raised as soon as December, said Chris Drazen, state program manager for TIAA-CREF, which manages the program for the state.

Drazen also said the program enrollment has continued to increase through this year even after the Sept. 11 terrorist attacks. As the program only began in November 1999, increases in enrollment may occur as more people find out about the program, he said.

Drazen also said he is glad people are investing even in the wake of the Sept. 11 attacks and their effects on the stock market.

"I think people are doing exactly what they should be doing," he said.