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Legislative leaders are planning to introduce a bill next week that would shift oversight of Maryland鈥檚 beleaguered college savings plan to the state treasurer鈥檚 office and wind down pre-paid college tuition plans.
Sen. President Bill Ferguson (D-Baltimore City) said during a Friday morning press briefing that conversations about the best way to handle dysfunction at the Maryland 529 plan have been taking place across the legislative chambers and top leaders will be taking up the offer made by Treasurer Dereck Davis (D) to move the program into his office.
鈥淚 appreciate Treasurer Davis for filling 鈥� the vacuum of leadership that existed around 529,鈥� Ferguson told reporters. 鈥� 鈥� This is a really crucial program and too many Marylanders have lost their faith in its administration and operations. I think moving it to the treasurer鈥檚 office is the right thing to do.鈥�
Davis offered to take over administration of the plan during a speech after his聽聽by the General Assembly earlier this week.
In a statement, House Speaker Adrienne A. Jones (D-Baltimore County) said, 鈥渢he issues around 529 have made college affordability harder than it already is 鈥� it鈥檚 unacceptable. The House and Senate are working together on a bill to find immediate and long-term solutions and expect to have it next week.鈥�
Maryland offers two 529 college savings programs (named for the section of IRS code that makes them possible). The Maryland Prepaid College Trust allows parents to lock in tuition rates for in-state schools by purchasing semester credits when children are young.
Last year, the 529 board suspended interest payments on the pre-paid tuition accounts after an accounting glitch surfaced when the agency switched from one outside vendor to another and family account balances could not be resolved.
The College Investment Plan is administered by an outside money manager and functions similar to a 401(k). The investment plan is unaffected by the software glitch.
Ferguson said Maryland is one of a small number of states to operate a pre-paid trust plan, so that program will be phased out in the legislation introduced next week.
Ferguson said he and other lawmakers are also thinking about ways to further expand the 529 program 鈥� including the creation of 529 plans for children at birth or a program to establish accounts automatically with funds from tax returns 鈥� though those reforms will likely have to wait for future years.
鈥淚t鈥檚 difficult for families to prioritize so the easier we can make it, the better,鈥� Ferguson said. 鈥淎nd that鈥檚 why I think Treasurer Davis will be the right person to help us expand access to the managed account.鈥�
