529 PLAN FREQUENTLY ASKED QUESTIONS

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Frequently Asked Questions - Financial / Investment

1. Who manages the College Illinois! 529 Prepaid Tuition Program investments?
   
   The College Illinois! Prepaid Tuition Program is administered by the Illinois Student Assistance Commission, an Illinois state agency (ISAC). Find them at www.collegezone.com.
   
   ISAC is governed by a ten-person Commission (there are currently two vacancies).You can read more about ISAC’s Commissioners on the Illinois Student Assistance Commission's website at www.collegezone.com/elibrary/2290_2720.htm
   
   The Commissioners of ISAC are responsible for the management of program investments, including hiring a qualified slate of professional investment managers and other professionals. ISAC’s Executive Director and the Chief Investment Officer are responsible for the day-to-day management of all program investments and investment professionals.
   
   The Commissioners of ISAC adopted an investment policy document that sets forth investment goals, requirements for making investments, standards for hiring of professional investment managers, and strategies, asset allocation and performance benchmarks for each asset class. This comprehensive investment policy is reviewed periodically by ISAC’s Executive Director and Chief Investment Officer and submitted to the Investment Advisory Panel and Commission for changes as needed. You can find the investment policy at www.529prepaidtuition.org/financials
   
   A current list of approved custodians and investment managers of the College Illinois! 529 Prepaid Tuition Program can be found in the Monthly Financial Report found on www.529prepaidtuition.org/financials
   
   
2. Can you clarify the pledge?
   
   Neither the taxing power nor the full faith and credit of the State of Illinois is pledged to the payment of program contract benefits.
   
   However, your contract and Illinois law provides additional safeguards to enhance the security of your investment. Illinois law and the program contract provides that in the unlikely event that the College Illinois! 529 Prepaid Tuition Program ever faces a funding shortfall, the College Illinois! 529 Prepaid Tuition Program will go to the governor of the State of Illinois and ask him or her to go to the State legislature to request enough money to cover the costs of either paying out your benefits or paying a refund of all your contributions plus the appropriate amount of interest. Under Illinois law, the Governor is required to make that request on behalf of the program.
   
   
3. Are annual reports for the program available?
   
   Yes, annual reports of the College Illinois! 529 Prepaid Tuition Program are available at www.529prepaidtuition.org/financials. Please note, the College Illinois! 529 Prepaid Tuition Program FY 2009 financial audit has not yet been released by the Auditor General of the State of Illinois. As soon as it is released, it will be available on the College Illinois! 529 Prepaid Tuition Program website.
   
   
4. Are the program’s financial statements available online or elsewhere? Are they audited?
   
   Yes, College Illinois! 529 Prepaid Tuition Program financial statements are available and -- as required by Illinois law -- are prepared annually by the Illinois Auditor General or a certified public accountant appointed by the Auditor General. You can find them at www.529prepaidtuition.org/financials.
   
   
5. What is the current asset allocation of the Fund?
   
   The asset allocation of the Fund is set forth in the investment policy and is also articulated in the Monthly Report, both viewable on www.529prepaidtuition.org/financials.The Illinois Student Assistance Commission, upon the review and recommendations of the Investment Advisory Panel, periodically makes asset allocation changes pursuant to this investment policy.
   
   
6. What is the target rate of return on investments and the overall policy goal of the investment plan?
   
   As has always been the case with markets, investment returns will vary from time to time. However, the overall long-term policy goal of the investment plan is to meet or exceed the weighted average rate of tuition inflation and pay benefits to beneficiaries as they become due.
   
   
7. How does the investment policy address risk?
   
   The College Illinois! 529 Prepaid Tuition Program Statement of Investment Policy provides diversification across many asset classes to reduce risks and maximize investment returns. Read the investment policy at www.529prepaidtuition.org/financials.
   
   
8. Are investments in the College Illinois! Prepaid Tuition Program guaranteed by the State or the FDIC?
   
   Investments in the College Illinois! 529 Prepaid Tuition Program are not deposits or obligations of, or insured by or guaranteed by the State of Illinois, the U.S government, the Illinois Student Assistance Commission, the FDIC or any other governmental agency or financial institution.
   
   
9. How often is the investment policy reviewed and evaluated to account for the changing economic and investment environment?
   
   The investment policy is reviewed periodically by ISAC’s Executive Director and Chief Investment Officer and submitted to the Investment Advisory Panel and Commission for changes at least annually. The investment strategy is monitored by the hired money managers in accordance with their respective mandate. Read the comprehensive policy at www.529prepaidtuition.org/financials.
   
   
10. Are the investments solely invested in the stock market?
    
    The College Illinois! 529 Prepaid Tuition Program investment policy guides investment decisions based on the soundness of long-term investment principles. The College Illinois! 529 Prepaid Tuition Program also makes investments and hires money managers in different asset classes such as bonds, stocks, real estate and other alternative investments to achieve broad diversification of the overall portfolio. You can read the comprehensive policy at www.529prepaidtuition.org/financials.
    
    
11. Can I direct my own investments?
    
    No. Your purchase of a College Illinois! 529 Prepaid Tuition Program contract is not an investment in a college savings plan. The Commissioners of the Illinois Student Assistance Commission are responsible for the management of program investments, including hiring a qualified slate of professional investment managers and other professionals. The program must adhere to the investment policy adopted by the Commission, you can read the investment policy at www.529prepaidtuition.org/financials.
    
    
12. Please explain the State of Illinois’ obligation to support the College Illinois! 529 Prepaid Tuition Program.
    
    The College Illinois! 529 Prepaid Tuition Program is supported by the State of Illinois in that if the program assets are insufficient to meet contract obligations, Illinois law sets forth a process to help ensure that the Program is able to meet its contractual obligations.
    
    Program participants have three levels of assurance that their benefits will be paid:
    
    First, a commission of the State of Illinois, the Illinois Student Assistance Commission, administers the College Illinois! 529 Prepaid Tuition Program, so program participants are in essence entering into a contract with the state of Illinois.
    
    Second, although the taxing power of the State is not pledged to make payments under a program contract, under the Illinois law that set up the program, the Governor of Illinois is required to request funding from the Illinois legislature sufficient to pay all program benefits during any year in which there is a current funding shortfall.
    
    Third, in the event the program is ever terminated or discontinued for a period of time, Illinois law requires that full benefits are secured for contract holders whose student beneficiaries are within five years of enrolling in college. For contract holders whose student beneficiaries are not within five years of enrolling in college, Illinois law requires that or a full refund with interest is secured for them.
    
    To learn more about the benefits and responsibilities of owning a College Illinois! 529 Prepaid Tuition Program contract, read our Master Agreement and Disclosure Statement at www.529prepaidtuition.org/master agreement.
    
    
13. Do you recommend that I invest in College Illinois! 529 Prepaid Tuition Program?
    
    Any investment, including an investment in a College Illinois! 529 Prepaid Tuition Program contract, is an individual decision that you should make considering your personal and financial goals and in consultation with your own tax advisor or legal advisor. ISAC cannot make a suggestion regarding the appropriateness of a program contract as an investment for you, personally.