SAVE FOR COLLEGE MASSACHUSETTS EDUCATIONAL FINANCING AUTHORITY Introduce yourself and share your financial aid background Let families know you’ll be speaking on college financial aid Explain to families the benefit of attending this seminar (learning the necessary facts of the financial aid process and free resources to help them throughout the process) Provide the timeframe: presentation will be approximately 1 hour followed by a Q&A Let families know if you’ll be taking questions throughout or just at the end Let families know that this is a presentation timely for seniors in high school and their families, but juniors and sophomores can benefit from learning what’s ahead Remind families to complete the evaluation following the presentation Tell families that the slides to this presentation can be found online on mefa.org/Events Point out the handout that families should have received when they arrived, which is filled with helpful information on financial aid MASSACHUSETTS EDUCATIONAL FINANCING AUTHORITY

Benefits of saving and 529s Agenda Benefits of saving and 529s The new development of College Savings Accounts or Child Development Accounts New State initiatives – SeedMA and SoarMA New tools – Invite Ed, Tax deduction Effect on enrollment and enrollment management Discussion

Why are savings important? The Benefits of Savings, Particularly 529 Plans

Saving vs. Borrowing *Based on 10 years at an interest rate of 7%. This example is an estimate only and market conditions may change.

What is a 529 College Savings Account? A 529 College Savings Account is a tax advantaged account specifically designed to help families save for college through professionally managed portfolios of mutual funds The funds in the account can be used to pay for qualified higher education expenses (including accredited vocational and technical training), and are exempt from federal and state income taxes Can be used at most accredited colleges and universities (and career schools eligible for Title IV funding) nationwide and at eligible foreign institutions The U.Fund Account is the Massachusetts 529 Plan offered by MEFA and managed by Fidelity Investments

Save for qualified higher education expenses 529 Account Features Save for qualified higher education expenses Tuition, fees, room, board, books, supplies, and equipment Savings can be used at any accredited college or university nation wide Parent or adult account owner maintains control over account on behalf of the student Minimal impact on financial aid eligibility Qualified withdrawals are free from federal income tax

Favorable treatment for financial aid Studies show less loan debt Positive Impact of 529s Favorable treatment for financial aid Studies show less loan debt Increased attendance and graduation Benefits all income levels *Image source: Washington University at St. Louis George Warren Brown School of Social Work Research Brief, March 2013 Elliot, William, Hyun a-Song, Ilsung Nam

Pioneering CSA research

Child Development Accounts CSA programs have spouted nationwide Oklahoma Seed OK San Francisco Kindergarten2College St. Louis College Kids Rhode Island College Bound Baby Maine Alfond Scholarship * Image from Prosperity Now

Is money seeded in to the account? Various Features Is money seeded in to the account? How is the program funded: publicly, privately, or both? At birth? Or in kindergarten? Are there match incentives? Is the money specifically designated to a 529 account? Financial education included? Do families need a bank account to contribute?

Some Early Indications Overview of Effects of CSAs on Education, Health, Equity, and Economic Mobility * Quick Guide to CSA Research, IASP Brandeis and Prosperity Now, 2018, Markoff, Loya and Santos

What’s going on in Massachusetts? New Improvements

Launched in 2015 through Mayor Walsh’s Office of Financial Empowerment Boston Saves Launched in 2015 through Mayor Walsh’s Office of Financial Empowerment Piloted at several Boston Public School Kindergartens The program will begin to grow to all district and charter schools in fall 2019 $50 to every eligible kindergartener Match up to $25 every 3 months Parents can choose savings vehicle, eg. 529 vs. other Classroom activities

Seeds $50 into a U.FUND 529 account SOAR MA Pilot Program Pilot program initiated in 2016 through Office of Economic Empowerment partnered with MEFA and Inversant Seeds $50 into a U.FUND 529 account Matches each $100 milestone with an equal $100 match up to $400 Open to 7th graders in five public schools in MA Lowell, Stoklosa Middle School Haverhill, Consentino Middle School Pittsfield, Reid Middle School Worcester, East Middle School Springfield, South End Middle School

Money can be used to pay for: SeedMA Pilot Program Provides kindergarten students in the Worcester Public School System with $50 deposit to establish a MA 529 college savings account Office of Economic Empowerment is partnering with MEFA and Inversant to deliver the SeedMA program and age-appropriate financial education training to Worcester families Money can be used to pay for: College tuition, fees, room and board, books, supplies, and computer equipment * Image from PBS

Statewide Launch Beginning in Fall 2020, every baby born in MA will have the opportunity to receive SeedMA money * Image from mass.gov

What’s new for MEFA

MEFA’s College Planning Tool Create a personal strategy to pay for your child’s higher education costs: Record your current college savings Project your future college expenses Receive guidance on meeting your shortfall

Saving for College Tax Benefits Contributions to the U.Plan and U.Fund are tax deductible Tax deduction will continue through 2021 Up to $2,000 in payments for married filers Up to $1,000 in payments for individual filers Limits are per filer, not per account

Combined Account Maximum: $400,000 No Annual Account Maintenance Fee MEFA U.Fund 529 Plan Minimum Initial Investment: $50 lump sum or $15/monthly automatic investments Combined Account Maximum: $400,000 No Annual Account Maintenance Fee Multiple investment options Active management, indexed portfolio, individual allocation portfolios, FDIC

The U.Plan Prepaid Tuition Program How the U.Plan works: Allows you to prepay up to 100% of tuition & mandatory fees at a large network of MA public and private colleges & universities By purchasing Tuition Certificates now, you lock in today’s tuition and mandatory fee rates U.Plan Tuition Certificates: Represent interest in Commonwealth General Obligation Bonds Are backed by the full faith and credit of the Commonwealth of MA Are not subject to market fluctuation Require $300 minimum to get started Annual enrollment period: May 1st to June 30th To learn more about the U.Plan visit mefa.org/uplan

Participating U.Plan Colleges & Universities

Presenter: Jonathan Hughes jhughes@mefa.org Discussion Presenter: Jonathan Hughes jhughes@mefa.org