HARRISBURG, PA — In a move celebrated by families across the Keystone State, Pennsylvania Treasurer Stacy Garrity has announced another round of fee reductions for the PA 529 Investment Plan (IP) accounts, marking the third cut in less than a year. This strategic decision, effective as of April 5, 2024, aims to make college savings more accessible and affordable for nearly 185,000 families enrolled in the program.
The latest adjustment decreases the operational support fee for PA 529 IP accounts by 0.5 basis points (0.005 percent), following previous reductions totaling 1.75 basis points since July 2023. These cumulative fee cuts are projected to save account owners close to $262,000 over the next 12 months, amplifying the impact of their savings efforts towards future educational expenses.
Treasurer Garrity’s initiative, in cooperation with Ascensus and Vanguard, Treasury’s partners in administering the PA 529 program, underscores a commitment to enhancing the financial feasibility of higher education for Pennsylvania families. “Cutting fees for the PA 529 Investment Plan helps children follow their dreams,” Garrity stated, emphasizing the state’s dedication to removing financial barriers to education.
The PA 529 IP, awarded a Gold Rating by Morningstar and ranked among the top two plans in the country, offers families a range of investment options, including Target Enrollment portfolios. The plan’s earnings are directly tied to the financial market’s performance, with Morningstar lauding the Treasury’s advocacy for investors, outreach efforts, and continued focus on reducing plan fees, making it more cost-effective than approximately 80% of its competitors.
Pennsylvania’s 529 College and Career Savings Program, encompassing both the Investment Plan and the Guaranteed Savings Plan (GSP), is designed to support families in saving for a broad spectrum of qualifying educational expenses. These range from technical and collegiate education to apprenticeships and K-12 expenses, offering significant tax advantages at both state and federal levels. Notably, assets saved in PA 529 accounts do not impact eligibility for state financial aid, further incentivizing participation.
Unique to the PA 529 GSP, families can save at current tuition rates to hedge against future tuition inflation, with options covering a spectrum from community colleges to Ivy League universities. Garrity previously eliminated asset-based fees for the GSP in 2022 and 2023, reinforcing the administration’s proactive stance on making education more attainable.
This series of fee reductions in the PA 529 plans represents a critical effort by the Pennsylvania Treasury to support educational attainment for all its residents, reflecting a broader understanding of the challenges many families face in financing education in today’s economy. By lowering the cost of saving for college, the state is effectively laying down a foundation for its youth, enabling them to pursue their academic and career aspirations without the daunting prospect of insurmountable debt.
As these changes take effect, the implications for Pennsylvania’s families and future workforce are profound. Enhanced accessibility to college savings plans not only facilitates a more educated populace but also contributes to the economic vitality of the state, preparing a well-equipped workforce to meet the demands of tomorrow’s job market. With these strategic fee reductions, Pennsylvania sets a precedent for supporting education through financial innovation, potentially inspiring similar initiatives across the nation.
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