ANNAPOLIS, Md. — State lawmakers are holding a hearing Wednesday to take up the issue of parents having trouble accessing funds in their 529 college savings program.
The problem started last spring when officials froze interest earnings after a calculation error inflated the minimum benefit for some account holders.
Parents want their money and they want answers.
Senate Bill 475 establishes a workgroup to identify policies, procedures, and practices that led up to the problem of parents not being able to access their money when they needed it most.
The Maryland 529 prepaid college trust program was designed to be a safe and tax-free way to save money for your child's tuition but the only thing it's taxing is parents patience trying to gain access to their funds to pay their child's tuition.
In November 2021, Maryland 529 switched its program manager and bumped up the interest accrual rates on some accounts. Program administrators later discovered a calculation error and decided to freeze interest earnings until they could resolve the problem.
Parents were told it would be a quick fix, but instead, it went on for months and caused parents to have to find ways to come up with tuition money for their kids on their own.
Earlier this year, a Maryland 529 spokesperson said the calculation formula was corrected but many parents still have questions about how much money is supposed to be in their accounts.
Senate Bill 475 proposes to find them answers, as well as develop and make recommendations for changes to prevent this from happening again.
Parents expressed their frustrations with Maryland 529 to the general assembly at a hearing in Annapolis last month.
Parent Michael Dubsky said "it's totally ridiculous that they've had such poor response when people have kids in college, you're in a panic, and these are responsible parents. These aren't dead beats these are the people that planned ahead."
Some Maryland 529 account holders feel cheated, with one mom saying she had $94,000 in her 529 account available but now the value showing is less than $40,000.
Parent Heather Boley said “so we had to come up with the balance and that's where we had to borrow from and now we have another $17,000 bill with no way to really pay it."
Parents hope the workgroup will get some answers and gain access to all of their money, although if passed into law, the workgroup isn't scheduled to report its findings and recommendations until on or before June 1, 2024.
