By Joan Marshall
Executive Director, College Savings Plans of Maryland
August 4, 2014
In running two 529 plans for our state, this time of year is always busy, yet rewarding, as we help thousands of account holders pay for qualified expenses on their beneficiaries’ college bills for the fall semester. In our office, we directly manage our 529 prepaid tuition program, so I really enjoy seeing the checks that we produce on a daily basis for thousands of students who are getting ready for college life in Maryland or across the country, many of them for the first time.
Contrary to some remarks in the popular press, prepaid tuition plans can be used at nearly any college in the country, just like 529 savings or investment plans. We are somewhat unique in Maryland in that the majority of students (approximately 60%) who use our prepaid tuition plan are attending private or out-of-state colleges, with the remaining 40% attending Maryland public two- and four-year colleges. Prepaid tuition plans operate differently from one another in the amount they pay towards tuition at private or out-of-state colleges, so check the plan for your state or your beneficiary’s state, right here at the “My State’s 529 Plan” tab.
While it’s an exciting time for us to send checks to hundreds of colleges, we know that it can also be a stressful time for many parents. We have a letter on our website just for parents who are using our prepaid plan for their student’s first college expenses to educate and inform them about their options for using their account; how to request payment; standard time frames; and how to obtain further assistance. This year, for the first time, we held a webinar for approximately 150 parents and grandparents that focused solely on using their Maryland 529 plan(s) – prepaid or investment plans – towards college expenses and we received a lot of positive feedback. We also added a recording of the webinar to our site so that it can be viewed at any time.
So, what can you do? If you have young children, start preparing now for that first college bill to arrive! I can’t stress this enough and I know you’ll be glad you did once you see that bill. If you have a young adult who will attend college this fall (or in some cases, more than one college student), you also need to start now – if you haven’t already – to learn about the various ways you can use your 529 plan account(s) for pay for qualified expenses. Your best source is your Plan Disclosure Statement. If you haven’t read it in a while, this is a great time for a review, since it should provide you with all of the information that you need. If you’ve invested in a 529 plan through your advisor, contact him or her as well to understand your options. Also, check your plan’s website for any additional tips you can use.
Congratulations to all families who committed to save for college and who are finally able to use their plan towards college expenses! You should feel great about your accomplishment! Most important, however, are the many investments that you have made – financial and otherwise – to help your child grow and mature into the young adult that you’re now sending off to college. Enjoy this time in your lives!
About the Author:
Joan Marshall is the Executive Director of the College Savings Plans of Maryland, which offers both a 529 prepaid tuition program and a directly-sold 529 savings plan. Together, the plans have more than 215,000 beneficiaries with investments of more than $4 billion. Marshall is a past Chair of the College Savings Plans Network (CSPN) and is Co-Chair of the CSPN Federal Initiatives Committee.