FAIRBANKS - The number of state residents directing Alaska Permanent Fund dividend money toward college savings increased each year between 1998 and 2008. Then came 2009.
The Fairbanks Daily News-Miner reported that 8,289 people have opted to put dividend money into the University of Alaska College Savings Plan, a 5.4 percent decrease from last year.
Plan officials blame the economy, saying fewer people are willing to save for later when money is tight now.
"I think the economy is getting to folks," said Linda English, the director of the UA College Savings Plan.
Permanent Fund dividend applications include an option to put half of each dividend into a college savings account. The option had been steadily increasing in popularity, climbing from 3,468 contributions in 1998 to 8,766 applicants in 2008, according to the Alaska Department of Revenue.
The savings plan lets people put money into a tax-deferred investment account, with the ability to use the earnings to pay for higher education. If an investor uses the money to attend a University of Alaska school, there's a portfolio option that allows it to keep pace with tuition and inflation.
The stock market has rebounded in recent months, but investors have not forgotten the beating they took last year. Rodger Hopp, a Fairbanks-based financial planner for FSC Securities Corporation, said people have been hesitant to invest their money in a variety of areas, including retirement funds and other stock portfolios.
"That's pretty normal across the board," he said. "When people are uncertain about what to do or where to do it or how to do it, they typically do nothing."
The 5.4 percent decline comes despite a rise in the number of people expected to get the dividend. The state received a record 657,000 applications in 2009, an increase of 16,000 from the year before.
The Permanent Fund dividend payment schedule this year begins on Thursday for applicants who applied early and requested direct deposit for their $1,305 dividend. Checks will be mailed starting Oct. 22.