Officials in charge of Maryland’s “529” program said families enrolled in popular college savings plans will experience even more delays in accessing funds.
Anthony Sabia, director of the Maryland Prepaid College Trust and College Investment Plan, said his team had made “significant progress” in its efforts to correct the error in how interest was calculated for trust account holders. However, he refused to promise a “specific date” for the matter to be fully resolved.
“We are committed to doing this right and fixing ongoing issues,” he said. Sabia, who spearheaded the program over the summer, spoke at a virtual “town hall” meeting to provide an update on efforts to set up accounts correctly.
According to Savia, accounts are being manually amended while the plan works to correct the electronic calculation of participants’ profits. This process he plans to complete in October. “The first step in that process is identifying accounts that need immediate attention,” he said. “We will try to prioritize the most urgent cases.”
The program works with outside consultants on “long-term strategies for addressing data transformation issues.”
For months, the parents were unable to access all the funds accumulated in the trust. said it had frozen the interest portion of
The problem surfaced late last year, but parents complained that they were noticing it for the first time this year. Some are unable to pay their fall tuition due to problems.
A program spokesperson declined to disclose the number of account holders affected by the failed handoff on Thursday.
During the 45-minute meeting, staff relayed questions submitted electronically by parents, but were not allowed to speak or seek follow-up.
Savia said the 529 committee is considering “multiple options” to correct the calculation error. “The goal is to ensure that all benefits are calculated accurately … so that no one takes more than they need and no one takes more than they need.”
One unidentified family complained that it had to take out a loan at 14% interest to pay for the fall semester’s tuition. In an interview, Treasury Secretary Derek E. Davis, a Democrat, said there needed to be a “talk” about whether such families should be compensated.
“It’s something that needs to be discussed,” he said. “I don’t know to what extent that’s a viable option, but at least we need a conversation.” Davis said he was speaking as a state treasurer, not as a member of the 529 board.
A handful of members are appointed to the 529 Board by the Governor. The rest serve based on their positions in state government.
Brian Savoie, a Montgomery County parent who set up a Facebook page titled “Maryland 529, release our attention now!” I did,” he said.
“Transparency is not Maryland529’s strength,” he wrote in an email. “Despite ending the call early, we have not answered all the questions submitted. We are beginning to compile a list of unanswered questions to present to the Executive Director.”
Sabia emphasized that the funds are not at risk. Rather, the authorities are working to fix the interest calculation problem, he said. “This issue does not affect money held in trusts — earnings or funds held for the public good. This is not a situation of lack of funds.”
Maryland offers two 529 college savings programs (named after sections of the IRS code). This trust allows parents to lock in future tuition fees when their children are young. Another College Investment Plan is managed by an outside money manager and functions similarly to a 401(k). Officials claim the investment plan was not affected by the software glitch.
Families affected by disability can contact the plan at: [email protected] The home page for Maryland’s 529 program makes no mention of ongoing interest calculation issues, but there is a second page that attempts to provide resources.
