ANNAPOLIS, Md. — Maryland State Treasurer Dereck Davis announced a retroactive 6% earnings rate for account holders of the Maryland Prepaid College Trust.
The State Treasurer's Office assumed responsibility for Maryland 529 and its programs on June 1.
“During my reelection speech in February, I made a promise to help resolve the complex issues that have plagued Maryland Prepaid College Trust account holders for over a year,” said Treasurer Davis. “It is my hope that with today’s announcement, we can provide certainty and some sense of relief to account holders, their beneficiaries, and the public about the path forward.”
Based on the most available data to date, Treasurer Davis announced the following:
- For contributions in an account prior to November 1, 2021, the annual earnings rate will be 6% compounded monthly, applied retroactively to the date of contribution and effective until the earlier of: 1) the date the earnings rate is set to zero as described below, 2) the date benefits are withdrawn, or 3) the date of contract termination. This earnings rate decision only applies to accounts that were open and active in the automated record keeping system on November 1, 2021.
- For contributions that posted to an account on or after November 1, 2021, the annual earnings rate will be rate equal to the 10-year Treasury note, compounded monthly, and effective until the earlier of 1) the date the earnings rate is set to zero as described below, 2) the date benefits are withdrawn, or 3) the date of contract termination.
- Beginning on a date no later than July 1, 2024, all contributions and all balances in an account will earn zero percent interest. Account holders will be notified at least 60 days prior to the date this change becomes effective.
Claims will not need to be filed to receive these earnings, as they will appear in accounts as soon as the system is updated.
“For me it’s been pretty time consuming because I knew the concept of it, I knew the right thing to do because I could read the document and I’ve read those in the past it’s just a huge weight off my shoulders," said Eric Marshall, MD 529 account holder.
“Today is a day of victory, but a long, overdue day. It’s a day many of us thought would never come. Thank you, Treasurer Davis, and the staff in the State Treasurer’s Office for coming to the only fair conclusion – setting an earnings rate of 6% since inception on all contributions. The body of evidence that was acquired by the media and members of our group through PIA requests was unimpeachable. I am grateful that the Treasurer saw that and has taken clear and unequivocal action. The Treasurer still has work to do. Now that the decision has been made, swift action is required. In less than 20 days, the vast majority of tuition bills will be due. We have already waited too long for nothing more than what was in our contracts. To the more than one thousand students, parents, and well-wishers who joined the Facebook group, Free Our Interest Now, Maryland529, I am eternally grateful. I was searching for help, information, and guidance when I formed this group. What we became is so much more. It may be used too often, but Margaret Mead’s quote “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has,” echoes in my thoughts when I think about my fellow account holders who I now call friends," said Brian Savoie, founder of the Free Our Interest Now! Facebook group.
The group will continue to exist as a resource and point of connection until every account holder feels that their rights have been honored."
The State Treasurer's Office also provided an a document with updated 529 facts in response to feed back received due to the earnings rate decision:
Updated Prepaid FAQs 07242023 by Rushaad Hayward on Scribd
The decision to change the earnings rate to zero percent will come no later than July 1, 2024, and is applicable to all accounts.
“I haven’t used the money in the 529 for a year and I have two kids in college that I have in college that I have to pay tuition and room and board for. Now I’ll be able to do that a lot easier," said Marshall.
Since Treasurer Davis knew he was taking over Maryland 529, his office started working with current employees and the board to figure out what the issue was.
RELATED: Treasurer promises quick resolution as he takes over embattled 529 savings plan
He found a miscommunication over when interest payments would increase between the board and either the staff or the vendor.
