Glossary

1 5 A B C D E F G H I L M N P Q R S T U W Y
1 5 A B C D E F G H I L M N P Q R S T U W Y

C

  • Capitalization

    A company’s capitalization is the market value of the company’s total outstanding securities minus the company’s liabilities. Companies are divided into one of three groups, based on capitalization: small-cap (less than $2 billion), mid-cap ($2 billion to $10 billion) and large-cap ($10 billion or more).

  • Certificate of Deposit (CD)

    A CD is a savings certificate that pays a fixed interest rate over a fixed period of time. CDs are usually issued by banks. A penalty may be charged for early withdrawal before the CD reaches maturity.

  • College Savings Plan

    General term for an account used to save for college, like a 529 account or an education savings account (ESA).

  • Compounding

    Compounding intensifies the power of investment growth and earnings by adding the growth and earnings to the principal balance of the account. For example, reinvesting interest and dividends in a mutual fund is a form of compounding. Compounding increases the rate of growth of an investment.

  • Contribution

    A contribution is a transfer of funds to a 529 plan account, by the account owner or by others such as family members and friends. A contribution is considered a gift for tax purposes.

  • Cost of Attendance (COA)

    A college’s COA is the total cost of attendance for one year. It includes tuition and fees, room and board, books, supplies and equipment, transportation and miscellaneous/personal expenses. The cost of attendance may also include disability-related expenses and dependent care costs.

  • Coverdell Education Savings Account (ESA)

    A Coverdell ESA, formerly known as an Education IRA, is an education savings account. Coverdell ESAs allow a family to save for K-12 and college costs. Various rules limit the amount that can be contributed to such an account as well as the timing of distributions.

  • Custodial Account

    A custodial account is a savings account that is controlled by an adult until the beneficiary reaches the age of majority, at which point control of the account transfers to the beneficiary. UGMA and UTMA bank and brokerage accounts are examples of custodial accounts. The custodian of such an account may establish a 529 plan account on behalf of the beneficiary. See also: UGMA and UTMA.

  • Custodian

    A custodian is an adult who controls a custodial account.

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For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

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The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

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