College plans lose

INDIANAPOLIS -- Declining stock values have contributed to the state's college savings program posting double-digit losses for the year in three of its key portfolios.\nAbout 43 percent of the plan's participants have children in the early years of elementary school and will most likely have plenty of time to recover from the loss, state officials said.\nIndiana Treasurer Tim Berry said officials were exploring ways to widen investment options for participants. Berry said details on such a plan would likely be announced this year.\nDespite the performance of the plan this year, Berry said enrollment and assets are up. The plan has about 20,000 participants, up from about 7,000 at the beginning of 2002. Assets have grown over that period to more than $45 million from $36 million.\nThe Indiana College Choice 529 Investment Plan, managed by Bank One investment arm One Group, has posted losses in:

• A growth portfolio, which invests aggressively in stocks and is intended for children up to age 10, is down 16 percent;
• A less aggressive portfolio for children ages 10 to 14 is down 12.3 percent;
• The equity index portfolio that attempts to track performance of the Standard and Poor's 500 composite index is down 20.3 percent.

Only the plan's bond portfolio is showing a year-to-date gain when sales charges are included, the Indianapolis Star reported in a story Saturday.\nScott Putney signed up for the Indiana plan partly to avoid the burden of taxes he paid on mutual funds intended for his 5-year-old son's college costs. He said he figures he has at least another 13 years before he needs the money.\n"The longer the horizon, the more risk I'm willing to take," he said.\nSome financial planners, however, said they do not recommend Indiana's 529 plan to clients because its returns trail the college funds in other states.\n"I wouldn't in good conscience refer any of my clients to the Indiana plan," said Matt Burke, of Lincoln Financial Advisors in Indianapolis.\nSome financial planners said they are directing clients to plans in other states such as Virginia and Rhode Island.