The post below is excerpted from “The Commitment Revisited: Financial Aid and Tuition Policy in North Carolina,” a report on Public and Private Colleges and Universities and Community Colleges.
Tax-Advantaged College Savings Plans
          Tax-advantaged investment plans provide tax incentives to encourage people to save money for future college costs. They are increasingly popular as forms of state and federal government aid for students. The two most common tax-advantaged benefits offered by states are tax-free savings plans and tax-free prepaid tuition plans. Both types are commonly called â529 plans,â a term derived from their section number in the federal tax code.[1]
         In June 2013, $205 billion dollars were invested nationally in more than 11 million such accounts, with an average account size of $18,013.[2] During the Great Recession, the average value of individual 529 accounts declined 33 percent, from $13,313 to $8,944 in constant 2009 dollars over the period between December 2007 and March 2009.[3]
            Residents in all 50 states may participate in some type of 529 plan. Forty-eight states (including North Carolina, but not Washington or Wyoming) and the District of Columbia have created savings programs. These plans allow savings for college to accumulate tax-free and, if the savings are used for post-secondary education expenses, they can be withdrawn tax-free. Twelve states (not including North Carolina) have tax-free prepaid tuition plans, which are guaranteed to cover fixed portions of tuition prices in the future, regardless of tuition increases. [4] Earnings in both types of plans â savings and prepaid tuition â are not subject to federal taxes. Many states offer tax benefits in addition to those provided by the federal government, and five states â Arizona, Kansas, Maine, Missouri, and Pennsylvania â even offer tax breaks on plans sponsored by other states.[5]
             Sixteen states offer both types of 529 plans, and many states have multiple savings plans.[6] The savings plans were first authorized by Congress in 1996, and subsequent amendments in 2001 and 2006 made them more attractive to investors. The prepaid tuition plans have been around since 1988 but have been losing ground to the savings plans, which are now the most common type of 529 plan. Until July 1, 2006, prepaid tuition plans were considered assets, and this made it more difficult for students to qualify for other forms of need-based financial aid.[7] The proportion of funds in prepaid tuition plans versus savings plans declined from 81 percent of the total in 529 plans in 1999 to 31 percent in 2002, 14 percent in 2007, and 12 percent in 2012.[8]
              CFNC.org has more information on the NC 529 plan: http://www.cfnc.org/save/save.jsp
The table below reflects the 529 plans available in each state, the assets in each plan, and the number of open accounts.
529 Plan Data[9]
Reporting date: December 31, 2014
                                                                                                                   Assets Under       Open
 Program Name                                                                                     Management       Accounts *
Alabama Prepaid Affordable College Tuition (PACT) Program       $93,505,385          29,279
Alabama CollegeCounts 529 Fund – Advisor                                     $1,000,558,654     51,533
Alabama CollegeCounts 529 Fund – Direct                                        $246,773,359        16,296
University of Alaska College Savings Plan                                          $428,952,075        32,528
Alaska – T. Rowe Price College Savings Plan                                      $1,980,757,460     79,824
Alaska – John Hancock Freedom 529Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $4,145,067,040Â Â Â Â Â 160,884
The Fidelity Arizona College Savings Plan                                          $331,947,575         25,555
Arizona Ivy Funds InvestEd 529 Plan                                                  $570,862,185         42,432
Arizona Family College Savings Program                                           $66,072,670             3,220
Arkansas iShares 529 Plan                                                                    $262,299,296          7,133
Arkansas GIFT College Investing Plan                                                 $306,401,607         22,420
California – ScholarShare College Savings Plan                                 $6,145,036,732     259,227
Colorado – Stable Value Plus College Savings Plan               $84,281,000             6,933
Colorado – Smart Choice College Savings Plan                                  $39,805,000             9,707
Colorado – CollegeInvest Direct Portfolio College Savings Plan      $2,361,669,405    112,477
Colorado – Scholars Choice® College Savings Program                  $3,598,973,346     202,197
Connecticut Higher Education Trust                                                   $2,287,110,700       98,180
Connecticut – CHET Advisor                                                                  $297,418,613          17,590
Delaware College Investing Plan                                                         $615,707,275           22,177
DC College Savings Plan                                                                        $372,456,919           18,356
Florida Stanley G. Tate Florida Prepaid College Program               $10,541,577,686    522,614
Florida College Investment Plan                                                          $396,785,300          41,264
Georgia – Path2College 529 Plan                                                         $1,730,084,750      125,460
HI529 – Hawaii’s College Savings Program                                         $67,588,592              4,295
IDeal – Idaho College Savings Program                                               $321,309,655          25,603
Illinois – Bright Directions                                                                     $1,756,568,433        93,848
Illinois – Bright Start Advisor                                                                 $1,910,452,613        82,421
Illinois – Bright Start Direct                                                                   $3,501,070,768       148,741
College Illinois 529 Prepaid Tuition Program                                     $1,049,808,226       44,873
Indiana – CollegeChoice 529 Direct Savings Plan                              $1,318,387,619      115,498
Indiana – CollegeChoice Advisor 529 Savings Plan                            $1,654,680,528      156,262
Indiana – CollegeChoice CDÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $11,128,683Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1,799
College Savings Iowa                                                                              $3,990,700,564      214,352
Iowa Advisor 529 Plan                                                                           $230,738,393            45,053
Kansas – Learning Quest Direct                                                           $1,779,594,785         74,624
Kansas – Learning Quest Advisor                                                         $259,757,512           17,521
Kansas – Schwab 529 College Savings Plan                                        $2,620,875,385        98,340
Kentucky Education Savings Plan Trust                                              $173,062,804           12,365
Kentucky’s Affordable Prepaid Tuition                                                $107,700,000            5,134
Louisiana (START)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $593,914,727Â Â Â Â Â Â Â Â Â Â 50,649
Maine – NextGen College Investing Plan                                             $8,198,520,985     293,110
Maryland College Investment Plan                                                      $4,011,928,830     185,169
Maryland Prepaid College Trust                                                           $910,147,176          34,372
Massachusetts U.Fund College Investing Plan                                   $4,792,890,734     155,866
Massachusetts U.Plan Prepaid Tuition Program                 $86,496,668              8,785
Michigan Education Trust (MET)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $1,058,408,400Â Â Â Â Â Â Â 44,803
Michigan Education Savings Program                                                 $4,027,197,203      215,519
Michigan 529 Advisor Plan                                                                   $345,855,988            30,857
Minnesota College Savings Plan                                                          $1,165,315,918        61,176
Mississippi Affordable College Savings                                              $181,202,303            11,006
Mississippi Prepaid Affordable College Tuition Program (MPACT) $317,361,928Â Â Â Â Â Â Â Â Â Â Â 19,910
MOST – Missouri’s 529 College Savings Plan                                      $2,244,710,285      133,199
Missouri’s 529 Advisor Plan                                                                  $227,467,786          15,228
Montana Family Education Savings Program – Bank Plan               $107,932,854            6,977
Montana Family Education Savings Program- Investment Plan     $124,851,408            9,092
Nebraska Educational Savings Plan Trust – Direct                            $1,688,719,040        67,657
Nebraska Educational Savings Plan Trust – Advisor                         $894,486,644           62,684
Nebraska – TD Ameritrade 529 College Savings Plan                       $782,025,977           34,808
Nebraska – State Farm 529 Plan                                                           $393,311,381           60,355
Nevada Prepaid Tuition Program                                                        $202,976,066           11,379
Nevada – Putnam 529 for America                                                      $381,149,272            18,980
Nevada – SSgA Upromise 529 Plan                                                      $1,250,320,168       150,686
Nevada – The Vanguard 529 Plan                                                        $10,930,094,151      269,344
Nevada – USAA College Savings Plan                                                   $2,289,127,664        217,960
New Hampshire – UNIQUE College Investing Plan                            $9,729,615,521        401,620
New Hampshire – Fidelity Advisor 529 Plan                                       $4,345,198,164        199,393
New Jersey – Franklin Templeton 529Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $3,118,350,079Â Â Â Â Â Â Â Â Â 253,325
New Jersey – NJ BEST 529 College Savings Plans                               $1,370,571,540          72,255
New Mexico – The Education Plan                                                       $471,834,574              20,595
New Mexico – Scholar’sEdge                                                                 $1,853,789,552        122,634
New York’s 529 College Savings Program Direct Plan                     $16,743,652,122       668,836
New Yorkâs 529 College Savings Program Advisor Plan                   $3,427,286,144         170,369
North Carolina’s National College Savings Program                        $1,599,173,468         126,594
North Dakota – College SAVEÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $384,683,125Â Â Â Â Â Â Â Â Â Â Â Â Â Â 26,170
Ohio – CollegeAdvantage 529 Savings Plan (guaranteed)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $413,521,689Â Â Â Â Â Â Â Â Â Â Â Â Â 41,775
Ohio – CollegeAdvantage 529 Savings Plan (direct)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $4,109,882,600Â Â Â Â Â Â Â Â Â 255,171
Ohio – BlackRock CollegeAdvantage 529 (advisor)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $4,704,511,723Â Â Â Â Â Â Â Â 350,367
Oklahoma College Savings Plan                                                           $658,434,428              44,829
OklahomaDream 529Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $102,314,411Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 7,001
Oregon College Savings Plan                                                                $1,157,814,885           80,121
Oregon – MFS 529 Savings Plan                                                            $1,109,474,323          72,698
Pennsylvania 529 Investment Plan                                                      $1,758,527,996          87,471
Pennsylvania Guaranteed Savings Plan                                              $1,683,291,151         103,576
Rhode Island – CollegeBoundfund                                                       $7,439,835,435          309,296
South Carolina Tuition Prepaid Program                                            $97,255,101                 5,708
South Carolina Future Scholars                                                            $2,115,422,249         105,428
South Dakota – CollegeAccess 529 Plan                                              $1,164,650,182            38,930
Tennessee BEST Prepaid Plan                                                               $82,958,730                  8,592
TNStars College Savings 529 Program                                                $24,014,298                   6,003
Texas College Savings Plan                                                                   $329,439,540               25,978
Texas – LoneStar 529 Plan                                                                      $172,966,891               12,108
Texas Guaranteed Tuition Plan                                                            $1,030,887,347             70,819
Texas Tuition Promise Fund                                                                  $573,129,583                28,709
Utah Educational Savings Plan Trust                                                   $7,838,689,998           263,976
Vermont Higher Education Investment Plan                                      $255,712,800               15,464
Virginia inVESTÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $2,908,421,913Â Â Â Â Â Â Â Â Â Â Â 186,706
Virginia – CollegeWealth                                                                         $94,581,678                 15,103
Virginia – CollegeAmerica                                                                       $47,860,620,420       2,095,618
Virginia prePAIDÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $2,351,093,269Â Â Â Â Â Â Â Â Â Â Â Â Â 70,537
Washington Guaranteed Education Tuition                                       $2,585,617,136           127,390
West Virginia – The Hartford SMART529Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $1,567,673,039Â Â Â Â Â Â Â Â Â Â Â Â Â 96,072
West Virginia – SMART529 Select                                                          $437,833,265               12,320
West Virginia – SMART529 WV Direct                                                   $184,010,480                12,626
West Virginia – Prepaid Tuition Plan                                                     $72,419,499           4,412
Wisconsin EdVest                                           $2,177,233,403           138,039
Wisconsin tomorrow’s scholar                                                             $1,610,038,262            128,654
Private College 529 Plan                                                                        $308,465,346                  8,154
Total:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $247,888,839,507Â Â Â Â 12,109,028
* Please note, comparisons of âopen accountsâ data collected prior to 2009 cannot be
compared to this data due to a change in the data collection methodology.
Endnotes
[1] 26 U.S. Code § 529.
[2] âCollege Savings Plans Network 529 Report: An Exclusive Mid-End Review of 529 Plan Activity,â College Savings Plans Network, September 2013, p. 3. Online at: http://www.collegesavings.org/includes/pdfs/ Sept%202013%20529%20Report_FINAL.pdf. In addition to the state-sponsored plans, a prepaid tuition plan is not included in these figures. It is sponsored by more than 270 private colleges and universities and has assets of $235 million in 8 million accounts, as of June 2012.
[3] âTrends in Student Aid 2009,â The College Board, Washington, D.C., 2009, p. 18.
[4] College Savings Plans Network 529 Report, note 2 above, p. 9.
[5] âState Tax Deductions for 529 Contributions,â FinAid.org. Online at: http://www.finaid.org/savings/ state529deductions.phtml.
[6] âState Section 529 Plans,â FinAid.org. Online at: http://www.finaid.org/savings/state529plans.phtml.
[7] âHistory of 529 Plans,â College Savings Plans Network. Online at: http://www.collegesavings.org/history.aspx.
[8] âTrends in Student Aid 2012,â The College Board, Washington, D.C., p. 32. Online at: http://advocacy. collegeboard.org/sites/default/files/student-aid-2012-full-report.pdf.
[9] “529 Plan Data,” College Savings Plan Network, Decmber 31, 2014. Online at http://www.collegesavings.org/includes/pdfs/Dec%202014.pdf.
Higher Education Research Report