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College Savings: Colorado this month becomes the first state to offer families two college-savings plans with tax benefits.

The new Scholars Choice program, beginning Oct. 19, will allow families nationwide to invest tax-free in a fund that is tied to market rates of return in mutual funds, which average about 12 percent annually, said Steve Roalstad, the executive assistant to the state treasurer. Separately, the 3-year-old Prepaid Tuition Fund is designed to combat tuition inflation by allowing families to put money into a fund and lock in their children's future college tuition at current prices.

Taxes on both plans are deferred until families withdraw their funds to pay for tuition and other expenses at colleges anywhere in the nation. At that time, the money is taxed by the federal government. There is no state income tax on the money, however.

Salomon Smith Barney Inc., a New York City-based investment company, will choose the Scholars Choice mutual funds with the approval of the Colorado Student Obligation Bond Authority. Families can pick one of three investment options.

"This will be a nationwide marketing campaign," Mr. Roalstad said. "It really is about the best program in the country considering fees are less than 1 percent of assets a year."

Enrollment Crush: Members of California's higher education community recently learned that elbow room in the state's colleges could be even scarcer than previously expected.

The state's postsecondary education commission estimates that nearly 715,000 new students will enroll in California's public higher education systems through 2010.

That means about 2.7 million students will be enrolled in the state's public college systems in 2010, a nearly 36 percent increase from 1998.

About 72 percent of the new enrollment demand hinges on population growth, said Daniel Parker, a spokesman for the commission. Other factors include increased interest in higher education and a future job market with greater demand for workers with a postsecondary education.

By fall 2010, community college enrollment is projected to swell by nearly 36 percent, while the undergraduate enrollment in the California State University system is expected to climb by 42 percent, the commission said. The University of California system's undergraduate student body, meanwhile, is expected to grow by about 38 percent.

--Julie Blair & Mary-Ellen Phelps Deily

Vol. 19, Issue 6, Page 13

Published in Print: October 6, 1999, as Colleges

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