National 529 Day (May 29, 2021) commemorates the importance of college savings programs across the country. Many States celebrate this day by offering a range of promotions to both raise awareness about the significance of saving for college and to encourage participation in 529 programs, according to the College Savings Plans Network. These creative incentives include contributions of $529 or more to newly opened or existing 529 accounts, raffles, and gift cards.
This year, we are seeing a new type of incentive: 529 scholarships tied to COVID-19 vaccines in the 12-to-17 age group. The State of Ohio was the first to offer this promotion, announced by Governor Mike DeWine on May 12th. Working with the Ohio Tuition Trust Authority (“OTTA”), the State will award five 529 scholarships equal to the full four-year cost at an Ohio public university to students who elect to be vaccinated and register for the drawing. The scholarships will be funded through federal Covid relief dollars. The funds will be contributed to an account in CollegeAdvantage, Ohio’s direct-sold 529 account, and held in trust by the Ohio Department of Health for each student winner.
Over 100,000 students already have registered for the Ohio Vax-a-Million scholarship lottery.
According to Tim Gorrell, the OTTA Executive Director, “when Governor DeWine’s administration began the conversation about Ohio Vax-a-Million, it was clear that CollegeAdvantage would be a natural fit for the student scholarship funds. Our Plan envisions and works toward a nation where families are better able to afford college. Ohio Vax-a-Million will immediately make our vision a reality for five lucky Ohio families. This campaign will also help raise awareness among families in Ohio and nationwide about the importance of saving for any education expenses after high school.”
Despite the financial strains of Covid-19, 529 Plans nationally have grown over the last year. According to ISS Market Intelligence as of March 31, 2021, accounts in 529 savings plans nationwide grew to approximately 14.2 million, a 4.8% increase since March 31, 2020, with assets under management growing to $412.3 billion, a 34.7% increase over the same time period driven by both continued contributions and market performance. This proves that funding higher education remains a priority for American families. The first of five Ohio scholarship winners was announced May 26th. “Ohio’s 529 Plan is thrilled to support the first student in the country to win a vaccine drawing scholarship award, as well as the remaining winners, once selected,” said Gorrell.
Similar to Ohio’s initiative, the Oregon “Take your shot” campaign is offering $100,000 scholarships to five 12- to-17 year olds who have had at least one shot. The $100,000 will come from federal Covid money and will be contributed to an Oregon College Savings Plan account for each winner. As in Ohio, each account will be held in trust for the winner until the student matriculates at an eligible institution, whether a college or eligible trade school. The drawing for all five scholarships will be held on June 28th, with the winners being announced on July 6th. “We are excited that Treasury’s College Savings Plan can help with the effort to increase vaccination rates in Oregon,” State Treasurer Tobias Read said on May 21st. “This is a win-win: get vaccinated now to protect yourself and others, and get the chance to fund your future through a scholarship that can be used for higher education and job training.”
In the past few days, other States have announced scholarship incentives tied to vaccinations, but to date Ohio and Oregon appear to be the only States that place the scholarship money in 529 accounts. From our perspective, we believe this is a creative way to raise awareness of 529 plans while promoting the importance of Covid vaccinations. As States seek ways to incentivize vaccinations in younger age groups, this as an example of an ideal opportunity to promote the importance of saving for education and the benefits of doing so through 529 Plans. In fact, it is the perfect combination of two important public policies aimed at providing security for the future.
We would be happy to discuss these Insights in more detail at any time. Please contact us if we have piqued your interest.