Competitive Edge
Competitive Edge
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CE – Info for Parents
Competitive Edge Agreement Form
The LPS Foundation is actively pursuing an idea to attract families to the district and provide a great service to current residents by offering college planning and financial assistance for each new incoming first grade student. The goal is to provide district residents a competitive advantage over other communities by helping families begin college financial planning for their children early-on while providing seed money to begin saving for college.
“This plan exemplifies the passion the Foundation Board has to help each student in our community to be successful during their K-12 years and beyond,” said Jim Cambridge, President of the LPS Foundation. “It also meets the goal of the Foundation to generate new revenue for the district. By providing this competitive edge plan, we hope to encourage parents to move to Livonia. If this program helps to generate just 10 new students, that is over $80,000 in revenue for each year they are with us,” he concluded.
The Foundation Board is in the early planning stages of this exciting venture and has made only limited contacts to date; however, they have received a positive initial response. They are looking to introduce the concept to interested corporate and private stakeholders beginning in the fall. Cambridge cited the example of the successful Kalamazoo Promise program, recently implemented in that city, as a model for Livonia’s Competitive Edge program. Early results of the “Promise” show a variety of benefits for all areas of the community including increased enrollement, improved housing values, new retail development, and a renewed student commitment to completing their education.
“Our program is not on the financial level of Kalamazoo’s program, but we certainly see the advantages for families to be in our school district with this type of support, along with the many other great things Livonia and Westland have to offer families with children,” Cambridge said.
How It Works
- The Foundation will provide an opportunity for the family of each first grade student to set up an IRS Section 529 college savings plan
- The Foundation will hold education savings planning seminars for parents to learn about college savings, along with the tax and other advantages of a Section 529 Savings Plan.
- At these seminars, the Foundation will be prepared to set up a Section 529 savings plan for each student. The Foundation will be the account holder and the student will be the beneficiary.
- The Foundation will provide an initial contribution to a 529 savings account for the first grade student.
- Parents are encouraged to start a 529 savings plan and contribute towards it.
- To be eligible to utilize the Foundations 529 savings plan, a student must:
- Sign up in first grade
- Graduate from Livonia Public Schools
- Attend an eligible post secondary school upon graduation
- (There are no restrictions for accounts set up by families)
- The Competitive Edge will be offered annually for each new first grade student.
- The Foundation will use the State of Michigan’s MESP Section 529 Plan. There are over 100,000 current savings accounts with this well established program and parents may be eligible for a state matching contribution. For more information on the state’s program, visit www.MISAVES.com.
Why It’s Offered
- The LPS Foundation believes “Every child needs a foundation.” So we are committed to simplifying college savings planning for parents and to help get them started.
- The LPS Foundation Board sees a unique opportunity to significantly expand its influence and benefit to the LPS Community.
- This program will help attract families to the community which benefits everyone. Property values, funding for schools and municipalities, and business traffic are all enhanced by new families moving to our community.
Off and Running
We have completed the concept for the program and are actively involved in fundraising. More specifically, we have:
- Researched and developed a way to create a 529 savings plan for each first grade student.
- Created eligibility criteria for participation.
- Identified community partners to provide the college savings planning meetings and sign up for parents.
- Started the fundraising campaign that will provide seed money for the program.
- Received significant multiyear funding.
- Targeted the program to begin for first graders as early as the Fall of 2008.
What makes this program unique from other college savings seminars?
Several things. Not only will the Foundation provide education for parents to learn about the importance of starting to save for college early and how just setting aside a little money regularly can really make a difference for the future, but the Foundation will allow parents to set up savings accounts right on the spot. No waiting, no going home and thinking about it, just starting – which is so important. In addition, the Foundation will provide seed money for our students to get them started. This program is very unique and will provide a great service to our families and students. Very few school systems provide the planning and actual set up of a plan for their students.
Why did the Foundation choose to provide this program to first grade students?
The Foundation chose first grade students as they want families to begin the college planning and savings early. Even a small amount of money set aside in a savings program early on can really make a difference for a student when they are ready to pursue their education after graduation. Students at this age level may also be eligible for matching funds from the State of Michigan.
Will only next year’s first grade students have this opportunity?
No. The Foundation plans to continue this program each year for each first grade class. Eventually, all students beginning and staying with LPS will have the opportunity to have this savings plan.
Why not do more than just the first grade?
Each first grade class represents about 1,000 students. There are not enough funds available to fund many more students with a meaningful contribution. Again, eventually all students who begin and stay with LPS will have the opportunity to create an account.
Can families of students outside of first grade at least have the opportunity to learn about college savings and set up an account themselves?
Yes. We will provide the planning seminars for other parents also, and make it very easy for them to set up an account, too.
What is Section 529 Savings Plan?
Section 529 refers to a section of the Internal Revenue Code. It creates the ability to set up a savings account to pay for future college or postsecondary expenses where the interest earned on the account is income tax free as long as the funds are used for postsecondary education. This is much different than a normal savings account where the interest earned is taxable income. See www.misaves.com for more information about Section 529 plans.
What are the eligible colleges/universities that can be paid for by this savings plan?
Any accredited university, college, or junior college is eligible. Many accredited trade schools are also eligible. To check for specific schools, go to www.misaves.com.
Are vocational schools eligible?
All accredited schools, whether they are community colleges or trade schools, are generally eligible. To check for specific schools, go to www.misaves.com.
Can funds be used at a private college or out-of-state college/university/other postsecondary schools?
Yes. These funds are not limited to just Michigan schools or public postsecondary schools. They can be used out of state and for private colleges/universities/other postsecondary schools.
Can funds be used for room and board?
Yes, under certain circumstances. See www.misaves.com for details.
Are students eligible who enter our school district after the first grade?
No, but the Foundation will allow families of other students who come to our district to participate in the seminars to learn about college savings and assist them to set up a college savings account themselves.
What happens to the funds for students who do not attend a postsecondary school?
Funds set aside by the Foundation for any student who does not go on to school will be returned to the Foundation, as they will be the account holder for the monies the Foundation contributed. Any funds set aside by families (separate from the Foundation contribution) will remain with the family to be used as outlined under Section 529 rules. See www.misaves.com for more details.
What happens to the funds for students who do not graduate from LPS?
Funds set aside by the Foundation for any student who does not graduate from LPS will be returned to the Foundation, as they will be the account holder for the monies the Foundation contributed. Any funds set aside by families (separate from the Foundation contribution) will remain with the family to be used as outlined under Section 529 rules. See www.misaves.com for more details.
Can a student leave LPS, then later return to LPS and still have the Foundation contribution?
No. Once a student leaves the district, the 529 account set up by the Foundation will be returned to the Foundation. Any funds set aside by families (separate from the Foundation contribution) will remain with the family to be used as outlined under Section 529 rules. See www.misaves.com for more details.
How is the Foundation funding these savings accounts?
The Foundation is a 501 © (3) non-profit charitable organization that raises funds through generous donations. Donations have come from local businesses, institutions, PTSA’s, parents, employees, retired employees, community members, and through fundraisers.
How much will each first grade student be endowed?
Each student will receive a one-time donation of at least $100 to get them going. As the Foundation grows, the goal of the Foundation will be to increase this amount.
What if a family already has a Section 529 College Savings Account or other college savings?
The Foundation will still set up an account for the student that will be in addition to any account the family has began.
What is the difference between this Section 529 college savings account and the MET?
The state Michigan Education Trust (MET) program allows parents to pay a set amount of money right now and guarantee that a certain amount of college tuition at a Michigan school (such as one semester or 2 years) will be provided in the future.
The Section 529 plan provides no guaranteed tuition in the future, but just accumulates tax free and whatever funds accumulated can then be used for college or trade school.
