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Thought Leadership Thursday

Reaching Nontraditional Savers


Thought Leadership Thursday Article

Reaching Nontraditional Savers
September 9, 2021
State of Tennessee
Dear Colleagues:

As we celebrate College Savings month, we should consider ways to reach nontraditional savers. As Treasurers, we have seen the studies showing that children with even small amounts of college savings are more likely to enroll in and graduate from college. A child with savings of less than $500 is 25% more likely to enroll in college and 64% more likely to graduate than a child with no savings. If higher education is critical to breaking the poverty cycle, how do we encourage lesser income families to save for future costs?

Incentivizing lower-income families has proven effective. According to, 15 states offer grants to qualifying residents who utilize a 529 savings plan. The Tennessee Department of Treasury launched the Tennessee Investments Preparing Scholars (TIPS) program in 2013 providing matching grants to lower to moderate income families that enroll in the TNStars College Savings 529 program. To qualify for TIPS, the account holder and beneficiary must be Tennessee residents; the beneficiary must be under the age of 15; and the family’s household income must be within 250% of the federal poverty guidelines. A family of four with a household income up to $65,500, well over the $53,000 average Tennessee income determined by the 2020 census, could qualify for TIPS.

When a qualifying family opens a TNStars account and enrolls a beneficiary in the TIPS program, Tennessee will provide a four-to-one matching contribution - $100 for every $25 - to the beneficiary’s TNStars account. Beneficiaries may receive up to $500 during a qualifying period and a lifetime match of $1,500.

The program was designed under the assumption that if a qualifying family only contributed $125 annually for three years, the minimum amount necessary to receive the full match, that family would attain $1,875 after year three. Assuming an average growth of 6%, that family would have more than $4,500 saved per beneficiary within 15 years. Since its inception, TIPS families have saved far more. TIPS has assisted 783 Tennessee families, providing matching grants totaling $715,736. These TIPS recipients have in turn contributed $902,537 to their TNStars accounts – far surpassing the minimum requirements to receive the full state match.

Tennessee is committed to remain competitive in the global economy and ensuring that high-quality, well-paying jobs are continuously available in our state for our citizens. Degree attainment is key to ensure that our job force has the post-secondary education and skills attainment needed to meet the evolving requirements of industries.

The TIPS program supports this initiative by providing access to a college savings plan to support the next generation in degree and skills attainment. If you are in one of the 35 states without an incentive program for nontraditional savers, my staff and I would be happy to assist you in developing a successful plan.
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