WASHINGTON COLLEGE SAVINGS

Transcription

1 WASHINGTON COLLEGE SAVINGS EVERY CHILD DESERVES TO GO TITLE BUILDING STUDENT SUCCESS ONE DOLLAR AT A TIME Jacquelyne Ferrado WFAA Conference October 12, 2017 Presenters Event Date

2 SESSION GOALS Raise Awareness Provide Education Share Resources Engaging with parents, students, families, and others. Encouraging the importance of savings. Developing opportunities to connect with families through schools, employers, and communities. Written materials Website Workshops Webinars

3 WHY SHOULD FAMILIES CARE ABOUT SAVING? Student Success Students with a college savings account in their name are more likely to finish college than those who do not. Financial Wellness Modern US culture is debt-driven. National movement to flip the model to savings-driven culture. Reduce Loan Dependency Nationwide student loan debt at $1.4 trillion. Savings help reduce the total amount a student may need to borrow.

4 WHAT IS A 529 PLAN? A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as qualified tuition plans, are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

5 WHAT IS A 529 PLAN? 1. Two types of 529 plans: Prepaid tuition plans (defined benefit) o GET Program is a prepaid plan. College savings plans (defined contribution) o Most states have this type. o Washington plans to open DreamAhead College Investment Plan in Earnings grow tax-free and remain tax-free when used for qualified educational expenses. 3. Students can attend public, private, community or technical colleges nationwide.

6 WHAT IS GET? prepaid college tuition plan. 2. Established in As with all other 529 plans, the earnings grow tax-free and remain tax-free when used for qualified educational expenses. 4. Students can attend public, private, community or technical colleges nationwide.

7 HOW DOES GET WORK? 1. Unit system 100 units = 1 year 2. Guaranteed: Resident undergraduate tuition and state-mandated fees of the highest priced WA public university. 3. Chose a contribution plan: Lump Sum Custom Monthly Combination (Custom Monthly and Lump Sum) 4. Lifetime maximum per beneficiary is 600 units. 5. Student can use up to 150 per academic year. 6. Initial residency requirement. 7. Anyone can contribute to an account.

8 HOW DO FAMILIES PAY FOR SCHOOL WITH GET? 1. Direct Payment Request GET makes payment directly to the school for tuition, fees and/or on-campus room & board. 2. Reimbursement to Account Owner Account Owner has paid eligible expenses out of pocket. Student can be reimbursed when Account Owner requests it. 3. Distributions and expenses must occur in same calendar year. 4. Student can use up to 150 units per year, plus carry over.

9 WHAT IS DREAMAHEAD? college savings plan. 2. Expected opening in early Open to residents and non-residents. 4. As with all other 529 plans, the earnings grow tax-free and remain tax-free when used for qualified educational expenses. 5. Students can attend public, private, community or technical colleges nationwide.

10 HOW WILL DREAMAHEAD WORK? 1. Investor chooses investment portfolio. 2. Returns subject to investment performance (i.e. not guaranteed). 3. Investors can choose from: 1. Age-based plans that self-adjust from more aggressive to more conservative investments as a student ages; 2. Risk-based fixed allocation portfolios that do not change over time. 3. A combination of portfolios. 4. No state residency requirement. 5. Anyone can contribute.

11 WHERE CAN I FIND MORE DREAMAHEAD DETAILS? 1. Expected to open in early Plan management will be with BNY Mellon for investment, operations and account services. 3. Marketing will be in coordination with the GET Program. 4. Both plans complement each other. 5. Visit get.wa.gov/savings-plan for updates.

12 HOW CAN FAMILIES CONTINUE TO SAVE? 1. Save regularly. 2. Celebrate educational milestones. 3. Remind families about the gift of college. 4. Incorporate all types of savings methods. 5. Take students on college campus visits. 6. Begin exploring scholarships and financial aid early.

13 BUT WHAT IF.? 1. Student gets a scholarship? 2. Student decides not to go to college? 3. Family moves out of state or the country? 4. Financial situations change?

14 COMMON MISCONCEPTIONS 1. Cannot afford to save. 2. Savings prevent student from receiving financial aid. 3. Understanding assets vs. income when it comes to financial aid.

15 HOW YOU CAN HELP 1. Gather college savings plan resources in your workplace. 2. Share information with parents and students when you can. 3. Let families know how to get more information by providing them the resources. 4. Attend a college savings workshop or webinar to learn more about GET and DreamAhead. 5. Reach out and ask questions by contacting us. 6. Let us know how we can help you.

16 QUESTIONS?

17 FURTHER READING GET Program (learn about GET and the new savings plan including updates) Washington Student Achievement Council (learn about the agency that administers GET and financial aid programs) College Savings Plans Network (learn about 529 plans nationwide) IRS Publication 970 (learn about 529 plan tax treatment and benefits)

18 CONTACT INFORMATION Jacquelyne Ferrado, Community Relations Manager Lucas Minor, Senior Associate Director GET Contact Center