DFI Partner Spotlight: WA529 – A tool for building bright futures

For the previous DFI Partner Spotlight article, I interviewed Tony Leahy from CENTS and discussed the Don’t Get Debt Slapped curriculum. For this new article, I spoke with Jackie Ferrado from the Washington Student Achievement Council’s 529 Education Savings Plans (known as WA529) and I was so happy to learn about the wonderful opportunity that WA529 offers students, so they can access college, university, technical school, and apprenticeship education.

WA529 – A tool for building bright futures

In this interview, Washington 529 Education Savings Plans Community Relations Manager Jackie Ferrado shares why an education savings plan could be one of the best tools that parents and students have at their disposal to plan for a bright future after high school.

For Jackie, partnerships are crucial to get the information to families when they need it.

My personal expectation when I am talking to families about WA529 is to help them learn about education saving plans. But sometimes I hear stories about a financial aid situation or other financial hardships, and I realize I may be able to connect them to other resources that help their specific situation. This is how partnerships are beneficial and support one another.

What does your role entail at WA529?

As the Community Relations Manager for WA529, my role involves managing and overseeing our community and employer relations efforts. My team and I spend a good amount of time in the communities and in workplaces, sharing information and resources about the college savings plans and helping people learn a little bit more about them.

What motivated you while working with WA529?

When I first started working for WSAC, I was a single parent with two kids in elementary school, and I didn’t have my degree at the time. So I became motivated in two ways: I was motivated to go back to school, and I was motivated to learn. What I was learning in school helped me to be a better person in the workplace.

I held a few different positions while at WSAC and WA529 and, as I transitioned through them, it was working for WA529 that became a really great tool for helping my kids recognize the value of the education that they were getting, hoping that they weren’t going to see that as a struggle. I didn’t want them to ever think that getting their degree or having that education was going to be something that they had to drudge through. I wanted them to feel like it was an exciting thing to do, and then they were excited that I was doing it, too. I remember sitting many nights at the coffee table doing our homework together.

Why are partnerships that relate to educating people in Washington about financial aid important for WA529?

The Washington Student Achievement Council (WSAC) is the state financial aid administrator, so there is a team of people who are experts in financial aid. Partnerships with organizations that know financial aid, including in our agency, help us because the partnerships become resources for the people we talk to.

As a representative of WA529, we know 529 plans and can share information, resources, and benefits of savings that work along with financial aid. But, when it comes to financial aid rules, we know we also have to connect families to the resources and experts who can best help them with specific financial aid questions.

Many of our partnerships also provide us access to the audiences that our partners have so we can share our information with them. To this end, we also collaborate with employers, sharing more information about WA529 to employees. The WA529 in the Workplace initiative for employers includes resources, information and educational opportunities.?

In his interview with me, Tony mentioned WA529 is a sponsor for the Debt Slapped for Parents curriculum. Can you speak to this relationship between CENTS and WA529?

Tony’s first curriculum helps students learn about the process of paying for college, as well as information and make decisions before they were filling out FAFSA? forms. The question of what would happen when the student went home and tried to talk to their parents is one thing that kept coming up whenever Tony and I met when doing outreach.

If parents didn’t have the same awareness or understanding about what the student was learning, how could they then talk and make decisions as a family? Because of a partnership we developed to share each other’s program information as often as possible, WA529 also decided to sponsor the development of the parent guide, a tool designed especially so that parents could accompany the student in their learning.

Would you give an overview of how WA529 and DFI have collaborated in the past to bring financial education to Washington communities?

After meeting several times through a variety of outreach opportunities, DFI Communications Director Lyn Peters and I realized that the information from WA529 goes hand in hand with the other resources available on the financial education resources tables that DFI sponsors at community events. Because of the nature of our programs, I also shared that when speaking about WA529, often people would tell me about an experience they had with financial services.

So, we discussed partnering to share WA529’s information on the DFI tables and WA529 would also direct people to DFI’s website or table when appropriate, so they could get the help they needed. I look forward to continuing to connect our two programs to help more families learn and feel supported in their financial education journey.

Would you give a quick overview of WA529?

WA529 stands for the Washington 529 Education Savings Plans, which are considered tax-advantaged college savings plans. This means that when people put money into a 529 plan, it grows tax-free. When the kids are ready to start using the money from the account, the earnings stay untaxed, if they use it for qualified expenses at eligible institutions.

WA529, which includes the GET Program and the DreamAhead plan, helps families save for their children, or even grandchildren’s future education expenses. Though technically, 529 plans are known as college savings plans, students may attend a variety of eligible institutions.

There are so many different pathways to higher education in addition to a four-year public or private college or university. Some students pursue community or technical/vocational schools. If they have a preference in their mind about what kind of career they want to have, and technical schools or vocational and apprenticeship training could be more appropriate to help them achieve that.

There are 529 plans across the country and two types: traditional savings plans and prepaid tuition plans. Every state in the country has traditional savings plans, while not every state has a prepaid tuition plan.

Washington has both:

• The GET program: This is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of an account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier people start, the more time they have to save and the greater the opportunity for increased value of the GET account. GET account values are measured in units, where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university.
• The Dream Ahead College Investment Plan: This is a 529 plan created by the state of Washington to help everyone in the U.S. save for higher qualified expenses. Account holders can easily manage their account online and use it to pay for tuition at an elementary or secondary public, private or religious school, and qualified higher education expenses at eligible schools all over the U.S. and overseas. DreamAhead provides a wide range of investment options and tools to help people save with the support of friends and family through gift contributions.

Am I able to get information about WA529 in Spanish and other languages?

Yes.

You very easily can go to our website and scroll all the way down to the bottom for the translate link. This allows people to translate each page on the website using Google Translate and gives them a great opportunity to sit at home, taking their time with the information in the language of their preference.

Also, if somebody were to call into our contact centers, there is the opportunity to connect an interpreter into the call. The person would be getting the information from our staff, but also in the language that is useful for them.

What are the minimum requirements for a person to be able to open an account with WA529?

Anybody can open an account for anybody. They can even save for themselves. Anyone in the U.S. can open a DreamAhead account; there is no residency requirement. However, the GET program does have an initial residency requirement, which only means that at the time the GET account is being opened, the account owner or the student themselves are living in Washington state. They can live anywhere in Washington, and they don't have to stay living in Washington.

There is always an owner for the account. Because they are tax-advantaged savings plans for education expenses, the IRS requires that the owner and the beneficiary to have at least a tax ID number or a Social Security number to get the accounts open. Other than that, the minimum expectation is to start an account with $5.

This month is Financial Aid Awareness Month. What information or message would you like to share with Washington parents and students through this interview?

One of the recurring themes I have noticed over the years in my experience with the program and particularly during outreach is an expectation that people can only do one or the other. For instance, they say, “I’m not going to save money, because I want my kids to be able to qualify for financial aid.”

Savings through a 529 plan does not prevent kids from qualifying for financial aid. I often hear parents express a concern that any savings may hinder or impact their student’s opportunity for financial aid, but in fact a 529 plan is one of the best savings options that has the least impact.

The reality is that if a parent or the student is the owner of the 529 plan, it is considered a parental asset and not untaxed income. Parental assets have much less impact on the student’s eligibility for need based financial aid than untaxed income, so it’s actually one of the best ways to save for education. The message is for families not to think that there’s a disconnect. Financial aid, including loans, savings, scholarships, work-study and a student working —these are all different ways of paying for college. Their savings help reduce the potential for too much student loan debt.

Some parents may be under the misguided impression that as soon as their kids apply for financial aid, they are going to receive many grants. Don’t wait until the month you are filling out the FAFSA? to come to find out that they get more loans and less grants, because then you will have lost a lot of time to save money and the compound interest that could help to reduce the amount that the student would then have to borrow. With a 529 savings plan, you can use the resources that you have already, so that the student borrows less.

Read more about how a 529 will affect financial aid on the WA529 blog.