The Virginia College Savings Fund has come up with a new way for families to offset future college costs. It's an old-fashioned, secure bank savings account, but with a modern-day tax advantage.

Mary G. Morris, executive director of the fund, in a recent meeting with the editorial board said her agency recognized that not all Virginians feel comfortable dealing with the fund, yet they still want ways to save for their children's or grandchildren's education.

To help them, the fund is entering into arrangements with local and regional banks to offer a traditional zero-risk banking product with the tax-savings advantage of other 529 programs. It's called College Wealth.

There isn't a product in Roanoke -- yet. The program is so new that just three banks are now online, but with 40 banks intending to participate, soon all Virginians should have a convenient way to save.

The bank programs are federally insured, meaning there is no risk that the principle or interest will dwindle in a bear market. But with no risk comes smaller returns. The bank funds can't be expected to grow at the same rate as money deposited with other college savings fund programs. But even modest savings can go a long way toward making college more affordable and could mean the difference in the amount of debt a student might shoulder.

The fund's other programs -- the Virginia Education Savings Trust, College America and Virginia Prepaid Education Program -- offer better growth opportunities or better assurance that all the costs are covered, but they aren't for everyone.

The traditional pre-pay plan requires a large financial commitment and contract that isn't affordable for all, especially to families struggling to pay for day care.

The Virginia College Savings Fund's other programs are attractive alternatives because they don't require large buy-ins or large monthly payments. But some people feel less comfortable investing in the market than saving money.

Some families already turn to the banks for college savings accounts but are not able to take advantage of the tax breaks that provide for up to $2,000 a year in a state income tax deduction. With College Wealth, families can enjoy both.

Copyright The Roanoke Times--June 2008