Joyce Moed | Business Samples

Offering a College Savings Program
By Joyce Moed

BEL Air, Md.–HAR-CO Federal Credit Union has partnered with education consulting firm SAGE Scholars, in Philadelphia, to offer a college savings program to its 30,000 members.

Through this rewards program, HAR-CO FCU depositors can save up to 25%–as much as $39,520–off of college tuition, according to the credit union, by earning "tuition reward points."

These are similar to frequent flyer miles, and can be redeemed as tuition discounts at more than 230 participating private U.S. four-year colleges and universities.

"It’s exciting," said Don Biles, COO of the $190-million CU. "It’s just another avenue for students, parents, grandparents to start planning for college early without having to tap 401ks. We’re excited about what it brings to students."

There is no charge for HAR-CO FCU members to participate in the program. Members who enroll will earn points equaling 5%, annualized, of the combined asset balances in their savings and checking accounts–including regular savings, checking, CDs, money markets and IRAs. One or more registered students can help receive points from multiple family members, including parents, grandparents, aunts and uncles. Points can be assigned anytime before the beginning of their junior year of high school.

"Your child has to be in the program by Aug. 31 of their junior year," Biles explained. "If you start as a senior, you’re not eligible."

Biles said the program is a "win-win-win" situation for the student, the school, and the financial institution.

"The student gets a discount on their tuition," he said. "The school is in a preferred position to compete for students. And the member is investing in the credit union to build their points."

These guaranteed minimum scholarships are capped at one full year of tuition, spread evenly over four years. Room and board is not included. Every point can be redeemed for $1 in tuition reduction at participating colleges. For example, if a member has combined deposit balances totaling $50,000, then in addition to the member’s usual interest income, he or she will receive 2,500 tuition points per year. In five years, that’s 12,500 points, which will later translate into $12,500 of the student’s tuition cost, spread evenly over their four years at college.

"The college uses those points as a discount," Biles explained. "Only private colleges–and they have to a member of the program, just like the bank or credit union has to be a member of the program."

The program was launched the beginning of September, and is being marketed in the CU’s monthly newsletter and on its website.

Biles said working with SAGE was a "professional process."

"You do a pay a fee to participate," Biles noted. But as for the ROI, he said "it’s hard to put a number on that. We’re looking more to affect the education community. Investing in students is the best way to look at it. We’re the credit union for Hartford County School System, and for Hartford County in general. What we like about it is that it encourages people to save early for college."