Gov. Jim Florio announced this month that the state would become the latest of several around the nation to use tax-exempt bonds as an incentive for residents to save for college tuition costs.

The zero coupon bonds will be offered in small denominations, and maturities will vary. A $1,000 bond, for example, will be sold at $280 for a 20-year maturity and at $600 for a 10-year maturity, the governor's office explained.

The New Jersey Building Authority will issue the bonds, with First Fidelity Securities Group co-senior manager on the deal and Dean Witter Reynolds acting as book runner.

The program is intended to help middle-class families save for college costs, but interest may be used for any purpose. If the money is used for college, however, investors will receive a 6% bonus on the maturity amount from the selected college.

The $75 million Garden State Savings Bond Program was billed as the second component of Gov. Florio's efforts to make higher education more affordable and accessible for middle-class families.

Earlier this month, the governor presented the first $5,000 student loan check under a new program aimed at families that earn up to $85,000 and do not qualify for federal student loan programs.

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