Enrollment in the Virginia Prepaid Education Program opens for a three-month period beginning December 1, 2008, offering individuals and families a way to lock in the future cost of tuition and mandatory fees at the state's public community colleges and four-year universities. VPEP contracts may also be used at technical schools and at public and private colleges and universities worldwide, but coverage of the full cost of tuition and mandatory fees is not guaranteed.

VPEP contracts – available through February 28, 2009 for newborns to 9th graders– are priced according to the child's age and the number of years purchased. A one-year community college contract for an infant, for instance, is available for as little as $34 a month with an extended payment – less than a daily cup of coffee. As with all accounts in Virginia's four 529 college savings programs, VPEP contracts are tax advantaged and, for Virginia state taxpayers, tax deductible.

The contracts, backed by a statutory guarantee, may be paid for in a lump sum or in installments over time. Prices for a lump sum contract range from $3,695 for a one-year community college contract to $45,136 for a four-year university contract for an infant. VPEP contracts may be purchased in various combinations of years and type of institution. Program details and full pricing information are available at www.Virginia529.com or by calling toll free 1-888-567-0540. Enrollment begins December 1st, when applications will be available online or by requesting a paper application.

"VPEP contract prices are primarily based on projected future tuition at Virginia's public colleges and universities and an assumed long-term rate of return – not on today's volatile markets," said Mary G. Morris, Executive Director of the Virginia College Savings Plan.

"Contract prices are set by the Board, after discussions with our investment consultant and actuary, to ensure coverage of the future costs of Virginia public college tuition and fees while keeping the cost as low and affordable as possible," added Morris, a former Virginia Treasurer and Senior Assistant Virginia Attorney General for finance and tax.

"We are mindful of the commitment required to purchase a VPEP contract and work to balance our need to meet future obligations with keeping the cost of the contracts in reach of as many citizens as possible" she said. "For those looking for other college savings options, we offer three savings programs that do not offer a statutory guarantee but which are flexible in terms of amounts invested, age and residency," Morris added. Information on all four programs is available online at www.Virginia529.com.

Beginning this summer, the Virginia College Savings Plan met with its actuary to begin the annual evaluation of the VPEP fund. The Plan's management worked with its investment consultant and Investment Advisory Committee to review long-term projections for returns on VPEP's diversified investment portfolio. For 2008-2009, in-state undergraduate tuition and mandatory fees increased at Virginia public schools an average of 7.3%.

VPEP's proposed contract prices were approved September 30, 2008 by the Board of the Virginia College Savings Plan, whose members include the State Treasurer, State Comptroller, Executive Director of the State Council of Higher Education for Virginia and Chancellor of the Virginia Community College System, as well as citizen members with expertise in business, finance and law.

"Given the current volatile economic environment, it will be interesting to monitor VPEP purchases this enrollment period," said Morris. "They could be challenged because of the tight economy or they could increase due to heightened interest in risk-free investments for higher education."

Money invested in an Internal Revenue Code Section 529 plan grows tax-free and may be withdrawn tax-free if used for qualified higher education expenses. Account owners filing Virginia income tax returns may deduct up to $4,000 a year beginning January 1, 2009 ($2,000 for 2008) for each 529 account, with an unlimited carry-forward. The $4,000 per-account limit does not apply to account owners age 70 and above.