BOSTON State Streets investment advisory arm and E-Trade Group plan to enter the higher education savings market by offering 401(k)-like programs to help people save for college.
State Street Global Advisors and the New York-based Internet trading firm announced July 6 that they want to target the tax-advantaged tuition and college savings market by using provisions created by the section 529 tax-deferral program of 1996. The program allows consumers to use pre-tax savings toward qualified education expenses, including tuition, housing, and books.
After retirement, education is the nations highest savings priority, said Nicholas A. Lopardo, chairman and executive officer of State Street Global Advisors, which he said is the largest U.S. pension manager. We want to work with E-Trade to play a key role in helping take saving for higher education to the next level, Mr. Lopardo said.
Mr. Lopardo said the companies are working together because E-Trade has the technology and State Street the customer base to get a wide range of customers involved in the program as soon as possible. Down the road, Mr. Lopardo said, the two companies plan to offer products, similar to mutual funds, that will allow customers to invest the college savings.