FRANKFORT, Ky., Feb. 15 /PRNewswire/ --

Kentucky families interested in saving for their children's college education now have a new investment option through the state's tax-favored Education Savings Plan Trust. Participants may now choose to invest in a diversified 100% Equity Option

"Since 1999, Trust participants could invest in the age-based Managed Allocation Option, which allocates the money among stock, bond, and money market funds," said Londa Lewis Wolanin, chief operating officer of the Kentucky Higher Education Assistance Authority. "While we believe that option is appropriate for most investors, we wanted to provide an all equity option for those with a higher tolerance for risk. Participants now have that choice and can invest in either option -- or a combination of the two."

People who choose the new 100% Equity Option will have their money invested solely in equities available through the TIAA-CREF Growth & Income and International Equity Institutional Mutual Funds. While there is a potential for higher returns, there is also greater risk and volatility.

Money invested in the Managed Allocation Option will be allocated among five TIAA-CREF Institutional Mutual Funds: the TIAA-CREF Growth Equity, Bond, and Money Market Institutional Mutual Funds, as well as the newly added International Equity and Growth & Income Institutional Mutual Funds. The Managed Allocation investment portfolios are designed to provide an appropriate mix of growth and protection of principal, and are rebalanced regularly depending on the age of the beneficiary. As the beneficiary nears college age, the asset allocation becomes more conservative.

While there is no annual limit on the amount that can be contributed to a Trust Account, there is a maximum account balance limit of $235,000 for all Accounts for the same beneficiary. Although additional contributions cannot be made once an Account (s) reaches the limit, an Account balance may continue to grow beyond this limit based on the performance of the investments in the program.

Other features of the Trust include:

-- No income limitations, which gives families at all income levels the

same opportunity to invest.

-- Participation that is open to current and former Kentucky residents and

their relatives, as well as individuals currently or formerly employed

in the state.

-- A low minimum investment of $25 per investment option (or as low as $15

per investment option per pay period through payroll deduction).

-- Tax advantages. Anyone -- a parent, grandparent, relative or friend --

can open a Trust account for a beneficiary. Account earnings will grow

on both a federal and state tax-deferred basis until the money is

withdrawn. When the money is withdrawn to pay for qualified higher

education expenses, the earnings portion of the withdrawal is federally

taxed at the beneficiary's tax rate and is not subject to Kentucky

income tax.

-- A low annual expense charge of 0.80 percent to cover fees for the

program manager and administrative services.

-- No application fees, sales charges, or maintenance fees.

-- The exclusion of Trust savings from the calculation of Kentucky state

student financial aid eligibility.

-- The use of savings for tuition, certain room and board expenses, books,

and required fees and supplies at nearly all public and private

colleges in or out of state. In addition, the accounts can also be

used for graduate, medical, law, and vocational schools.

-- Savings not used by the beneficiary can be transferred without penalty

to another family member to pay for his or her college costs.

The Education Savings Plan Trust was created by the 1988 Kentucky General Assembly and is overseen by the Kentucky Higher Education Assistance Authority, the state agency that administers grant, scholarship, work-study, and loan programs to help Kentucky students pay higher education expenses. TIAA-CREF Tuition Financing, Inc., a wholly owned subsidiary of TIAA, which is part of the leading pension system for colleges and universities, serves as program manager. TIAA-CREF Tuition Financing has been selected to serve in a similar role by more states than any other company. States include California, Connecticut, Idaho, Michigan, Minnesota, Mississippi, Missouri, New York, Oklahoma, Tennessee, and Vermont.

The 2000 Kentucky General Assembly also created a prepaid tuition program that is scheduled for implementation in fall 2001. For more information on this new program, call 1-800-465-4722 or visit http://www.kytreasury.com. For an application or more information about the Kentucky Education Savings Plan Trust, call 1-877 KY TRUST (598-7878) or visit the Program's Web site at http://www.kentuckytrust.org.

For more information, contact:

Jim Tolve

Media Relations

212-916-5580

jtolve@tiaa-cref.org

For more information about the Kentucky Education Savings Plan Trust, you must consult the Disclosure Booklet. Accounts representing interests in the Program are offered only through the Participation Agreement and the Disclosure Booklet, which describes the program. Neither contributions nor investment returns in a Kentucky Education Savings Plan Trust Account are guaranteed. Investment results will vary based on the market performance and the value of your investment can go up or down. Also, there is no guarantee that your investment objectives will be met.