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529 Plans Are Investing Millions to Help Families Of all Incomes and Backgrounds Save for College

Thought Leadership Thursday Article

529 Plans Are Investing Millions to Help Families Of all Incomes and Backgrounds Save for College
November 17, 2022
Co-Chairs
CSPN Data, Operations, and Technology Committee
Dear Colleagues,
American higher education institutions are welcoming increasingly diverse students from a range of family backgrounds. In response, many 529 College Savings Plans have taken aggressive steps to engage families - from the widest possible range of household incomes - in the process of saving for higher education. However, until today, no complete picture of state and industry efforts existed, and our knowledge was relatively scanty and anecdotal. As such, CSPN is proud to release the results of its first national compendium of 529 plan efforts to help families save. The 2022 report, called Building Savings and Aspirations for College Success: A report for CSPN on the results of a national survey of state 529 plans, is now available for all CSPN members and corporate affiliates.The report, overseen by the CSPN Data, Operations, and Technology Committee, is based off the in-depth responses of 94% of states offering a 529 plan. With a first-of-its-kind breadth, the report provides a comprehensive review of 529 plan efforts to help families save through a range of efforts – including financial incentives and matches, removing barriers to saving, lowering account fees, providing tax savings, and establishing innovative partnerships with nonprofits and universities. Just two of the many highlights in the report, include:In 2021, 529 plans provided $42 million in direct incentives to help families saveTo help encourage 529 account opening or saving, in 2021 the majority of states offering a 529 plan offered one or more financial incentives to account holders. 12 states matched a total of $21.9 million in contributions, including programs in states as diverse as California, North Dakota, Colorado, and Louisiana. Some of these programs provide particularly generous deposits for low-income families, such as Tennessee’s match of $4 for every $1 saved by a low-income family.An additional 9 states invested $17.1 million in initial deposits to families that opened a 529 account. West Virginia, for example, offers $100 for any parent or guardian that opens an account within the first year after birth, while Nevada makes an initial $50 contribution for all children entering public kindergarten.35 states invested an additional $2.9 million towards accounts through one-time offers, prizes, and scholarships. New Jersey’s NJBEST, for example, provides tax-free scholarships between $1,000 and $3,000 to 529 plan beneficiaries.529 Plans Are Increasingly Equipped to Serve a Wide Diversity of FamiliesThe report also found that almost every state now has one or more efforts in place to engage underserved groups – including 33 states that perform targeted outreach in rural areas, 32 states that now accept ITIN as a form of documentation for the account owner, and the 26 states that make multi-lingual staff available at call centers. Kansas, for example, employs a range of strategies to reach populations that are historically less engaged with 529 plans – including call center customer service available in a range of foreign languages and excluding the value of 529 accounts from “asset tests” used to determine eligibility for SNAP, Medicaid, and cash welfare.The comprehensive report provides a wealth of examples of states employing innovative strategies to help all families save for their loved ones. CSPN encourages all members and corporate affiliates to learn from the report and, in the future, looks forward to using the findings to help members share success stories, to learn from each other’s efforts, and to continue growing the number of families saving for their children’s future education.

Best,

Alyson Luszcz and John Mitchell, Co-Chairs, CSPN Data, Operations, and Technology CommitteeAlyson Luszcz has over 19 years in the 529 industry and is currently the Lead Manager of Intermediary Operations at T. Rowe Price, overseeing the day-to-day operations and plan innovations for the John Hancock Freedom 529 Plan.  She serves as Co-Chair of the CSPN Data, Operations, and Technology Committee and is based in Owings Mills, MD.John Mitchell is Director of College Savings at the Illinois State Treasurer’s Office, where he oversees Illinois’ two 529 college savings plans: Bright Start Direct-Sold and Bright Directions Advisor-Guided. He serves as Co-Chair of the CSPN Data, Operations, and Technology Committee and is based in Chicago, IL.

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