Jack Hogan//June 2, 2023
//June 2, 2023
As the State Treasurer’s Office assumes oversight of the troubled Maryland 529 prepaid college trust and investment plans, it remains unclear when, or if, families’ account values will be restored to previous, higher balances that the state has said were the result of a calculation error.
The treasurer’s office, which took over responsibility for the program on Thursday, is working “expeditiously … to enable account holders to access all funds they are entitled to,” Shareese Churchill, deputy treasurer of communications and public affairs, wrote in an email.
Treasurer Dereck Davis, though, has been hesitant to give a specific timeline for when families might be able to access their earnings.
Maryland 529, named for a section of IRS code that deals with the plans, offers two college savings plans. Families who have invested in the state’s prepaid college trust — which allows families to pay tuition for their children by purchasing semester credits in advance — have said their earnings from years of investing have been slashed by tens of thousands of dollars.
Davis’ office took over the savings plans in response to families reporting the Maryland 529 agency that previously administered the program had blocked them from accessing their savings.
During the legislative session that ended in early April, state lawmakers voted unanimously to transfer the Maryland 529 program and abolish the agency’s board of directors. Gov. Wes Moore signed the measure into law later that month.
“Our office has been preparing for this transition for months,” Davis wrote in a letter to account holders on Thursday. “We know how important these savings are to Maryland families, and we intend to be as transparent and deliberate as possible in our actions.”
Davis is expected to completely phase out the prepaid college trust.
As of Thursday, families could no longer enroll in the Maryland 529 prepaid college trust, and existing account holders couldn’t get extensions or upgrades to purchase additional school credits.
Anthony Savia, formerly the executive director for the Maryland 529 agency, will serve as a deputy treasurer and administer the program.
Savia was opposed to his agency losing authority of the Maryland 529 program to the treasurer’s office.
In a letter to state lawmakers, he wrote, “Given the multitude of responsibilities that a state treasurer has, direct oversight by only one individual would be difficult. Abolishing the Maryland 529 Board that oversees the agency and moving all reporting responsibilities under the treasurer could result in less oversight for the Maryland 529 programs than is currently in place.”
As of last fiscal year, nearly 30,000 people had invested their tuition savings in the state’s prepaid college trust, totaling about $1.1 billion in investment holdings.
Families have testified to state lawmakers that their account values plummeted after the implementation of a new method of calculating investment returns. They said the Maryland 529 agency told them their prior balances were the result of a calculation error.
Savia said in a previous statement that, “Prepaid College Trust Tuition Plan benefits are – and have always been – available for payment. Manual account reviews are continuing for Prepaid College Trust account holders who want to know the current minimum benefit, rollover and refund value.”e