BOSTON -State Street Corp.'s asset management arm announced Thursday that it has formed a subsidiary to handle education savings.
State Street Global Advisors' new Schoolhouse Capital LLC introduced a section 529 college savings product to correspond with the launch. Such plans enable families to invest for college tuition with taxes on the income deferred until withdrawn for tuition payments.
State Street's Education Plan, available to all U.S. residents, offers a selection of investments from various managers as well as age-based funds and customized allocations. Customers can use the Web to enroll and to transfer money between accounts.
The plan received the highest rating from savingforcollege.com, a Web Site that rates education savings plans.
Nicholas A. Lopardo, vice chairman of State Street Corp. and chief executive officer of State Street Global Advisors, said Schoolhouse Capital will create additional products for specific college saving situations. Eventually it will set up an "education exchange" for sale of various providers' education savings plans.
Ralph J. Constantino, director of the special investor markets group at State Street Global Advisors, has been named chief executive officer of Schoolhouse Capital. Mr. Constantino said the unit would distribute through financial intermediaries, the Internet, employee work sites, and conventional direct marketing. Schoolhouse has signed a distribution agreement with E-Trade.
"College savings plans look increasingly similar to 401(k) plans, a market in which State Street is already an industry leader," Mr. Constantino said. "Many individuals expect their college savings plans to offer the same flexibility, choice, and related services that they currently have in their 401(k) plans."