1. Inclusion and College Savings Plans: Results from Survey and Potential for Future Margaret Clancy Center for Social Development November 11, 2003

2. Authorized by federal legislation in 1996 - IRC Section 529 Established and maintained by states Used for post-secondary education Require small initial contributions College Savings Plans

3. Earnings are free from federal tax Most states offer tax-free growth of earnings Many offer state tax deduction Tax Benefits

4. $2.5 billion December 2000 $7 billion December 2001 $19 billion December 2002 Growth in Assets

5. Whose Wealth is Growing? Significant tax benefits Large, lump sum deposits reap higher benefits Marketing to high-wealth individuals by tax planners

6. Who is Participating? Few states track demographics Tax incentives benefit people in higher tax brackets Brokers and tax planners market to high-wealth individuals

7. State Innovations for Inclusion Match for low- to moderate-income savers (5 states) Link college savings plans with IDAs: facilitate rollovers or use plan as investment vehicle for IDA (3 states) N=40

8. State Innovations for Inclusion 501(c)3 registration (31 states) Assets not counted for state tuition grant purposes (18 states) N=40

9. State Innovations for Inclusion Creditor protection (17 states) Scholarships and awards (9 states) Gear Up programs (4 states) N=40

10. Community-based Partnerships 76% agree or strongly agree that partnership with community-based organizations provides opportunities to reach low-moderate income participants. N=38

11. 86% agree or strongly agree that plans should include more low- income participants Include Low-Income Savers N=36

12. Majority disagrees that plan rules and regulations discourage participation by low-moderate income group Plan Rules not a Hindrance N=37

13. 95% agree or strongly agree that the effort to introduce 529 plans into the workplace provides an opportunity to reach participants of all incomes Workplace Enrollment N=37

14. How Is This Relevant to IDA Field? Available match funds Tracking after IDA program ends Broad outreach Centralized accounting

15. Potential for Partnership Non-profits may wish to: Facilitate outreach and enrollment Provide financial education sessions Encourage deposit of EITC refunds Allow for rollover of balances into college savings plan

16. Long-term Vision Asset-accumulation by people of all income levels

17. Publications and Resources Center for Social Development George Warren Brown School of Social Work Washington University in St. Louis Website: http://gwbweb.wustl.edu/csd Phone: (314) 935-8178 E-mail: mclancy@gwbmail.wustl.edu