The gift of education can be a powerful motivator. And State promotional campaigns are embracing this truth more than ever. In our June 2021 Insight, Covid Vaccine Incentives: Partnering with 529 Plans for the Future, we highlighted Ohio’s Vax-a-Million and Oregon’s Take Your Shot campaigns, both of which offered college scholarships to students who have received a Covid-19 vaccination. Eligible students entered a lottery where names of winners were drawn.
With a new cohort of students now eligible to receive Covid-19 vaccinations, States are again using college savings campaigns to encourage parents to get their children vaccinated. New York Governor Kathy Hochul recently announced the Vaccinate, Educate, Graduate initiative, which awards fifty full scholarships to any two- or four-year State college or university in New York. The Governor promoted the initiative last month, stating, "The 'Vaccinate, Educate, Graduate' program is an extraordinary opportunity for children to win free tuition to a SUNY or CUNY college or university, and I urge parents and guardians to help their children get vaccinated and enter into this once-in-a-lifetime program." All children between 5 and 11 years old who have received at least their first dose of the Pfizer/BioNTech vaccine are eligible for this lottery.
The New York, Ohio, and Oregon campaigns serve as a reminder: the gift of education is profound. And with the holiday season upon us, States should not miss the opportunity to remind families of how meaningful that gift can be. Section 529 Plans offer the perfect vehicle to support a student’s education, whether it be college, an apprenticeship program or even the repayment of a student loan. In fact, a recent College Savings Foundation survey of 1,000 parents found that a significant number of families plan to ask loved ones for a 529 contribution instead of a material gift.
Accumulating educational savings can be extremely impactful to the academic trajectory of a child. As referenced in a recent blog post from the College Savings Plans Network, research suggests that low- to moderate-income children with educational savings of even $499 or less are approximately three times more likely to enroll in college and four times more likely to graduate than a child with no savings. Moreover, a gift toward education could be especially pragmatic this year, as retailer staffing shortages, increased prices, and shipping delays produce hurdles to purchasing traditional, material gifts.
As we have often noted, college tuition continues to rise — according to the College Board, in the past ten years, total tuition, fees, room and board increased by 11% at public four-year and by 14% at private nonprofit four-year institutions. Even the most diligent saver may find accumulating enough money for a college education daunting. In our view, Section 529 college savings and prepaid plans remain the best way to save for college. American families have demonstrated their confidence in 529 by investing more than $464 billion across approximately 15.3 million 529 accounts nationwide.1
Contributions to 529 Plans can be made in large or small amounts. In addition, accelerated gifting (up to five years) is available, allowing funds to accumulate at a faster pace without bumping into gift tax limits. Moreover, the giftor may be able to take advantage of a State tax benefit depending on where he or she pays taxes and the plan receiving the contribution.
A 529 contribution can be one of the best holiday gifts around, and now is the perfect time for State programs to remind families of the benefits of making a gift that will last a lifetime.
1 Source: College Savings Plans Network as of June 30, 2021