Theresa Wadden wants to see her son attend the school of his choosing, either Oregon State University or the Massachusetts Institute of Technology.

And Wadden, of Bend, has planned on using the Oregon College Savings Plan to help her son attend college in Cambridge, Mass., or Corvallis.

The plan, established in 2001, allows parents to save for college. Also called the 529 plan, after Section 529 of the Internal Revenue Code, parents can invest up to $310,000 in different portfolios and later take the money out tax free, if it’s used for a qualified college.

Nearly 150,000 people have an Oregon College Savings Plan.

But recently, that plan took a drastic dive.

One of its underlying funds, the Oppenheimer Core Bond Fund, lost 38 percent of its value this year, according to Michael Parker, the executive director of the Oregon 529 College Savings Network, with the state treasurer’s office. The loss dragged down the entire fund by 9 percent.

Luckily for Wadden, her son is only a sophomore at Bend High School.

“I’m avoiding even looking at the statements right now,” Wadden said, saying she’s lucky there are a couple of years to recoup some of the losses.

But because she’s an independent college counselor and educational planner, Wadden said, she knows there are plenty of families in a less fortunate situation.

“I can tell you a great number of families are reconsidering their options for next year,” she said.

With the drop in the savings plan, coupled with job losses and the overall dismal economy, more families are picking out schools based on a bleaker financial picture, she said.

“Maybe if they had planned for Oregon public universities, they are now looking at community colleges,” she said.

Parker said the plan is structured to have aggressive and riskier portfolios for younger children.

“And then it automatically moves to more conservative portfolios as the child ages and gets closer to college,” Parker said.

The fund was heavily invested in mortgage-backed securities and corporate bonds, Parker said, and the fund took a hit when the credit market started to seize up.

“Mortgage-backed securities are not inherently risky,” Parker said.

“It’s an unprecedented time, and we’re dealing with a financial crisis we haven’t seen since the 1930s. And that’s caused this fund a lot of problems,” Parker said.

Because the fund was considered conservative, it’s impacted the conservative investors — the ones with college-age children — the hardest.

“It’s analogous to someone in retirement now,” Parker said. “They don’t have the ability to make up for that loss because they are using the asset. The kids who are 18 or 19 and ready to draw the money, for them, this fund has caused problems.”

Carolyn Platt is also an independent college counselor in the Bend area. She said she has seen families of all income levels carefully considering their options.

“I think it’s a wait-and-see kind of attitude,” Platt said. “More people are choosing to be sure to apply to an in-state public university so they have a backup.”

Parker said he’s been fielding many calls from upset investors.

“We do have a lot of concerned investors right now, and rightly so,” he said. “What we’re telling them is we’re going through the process to make sure the fund is still sound. The board can take quick action if isn’t, and the fund can be pulled out. … It happened quickly, and we are taking steps to correct it.”

Oregon State Treasurer Randall Edwards is the head of a board, made up of five people, that oversees the Oregon 529 College Savings Network.

Parker said the fund had been performing well until the financial crisis hit. Although he said his office doesn’t give investment advice, he recommended that students who are about to enter college or are already there, exhaust all their other options — loans, financial aid, income — before drawing from the savings plan, in order to give it time to recuperate.

Wadden said that students should still apply to a variety of schools and ignore the sticker price initially.

“The financial picture may look different when they get more information,” she said. “Once they’ve gone through the entire process, application, financial aid, merit-based scholarships, then they need to make a decision about the bottom line.”