New York's 529 College Savings Program's Direct Plan has eliminated the $25 minimum contribution required to open an account in an effort to make the important college savings accounts available to everyone, New York State Comptroller Thomas P. DiNapoli and New York City officials announced today.
"We're making it easier for all New Yorkers, regardless of income level, to invest in their loved one's future," DiNapoli said. "With education costs rising, it's important that we make sure everyone has the opportunity to attend college. We're grateful to New York City and to NYC Kids RISE for their efforts to increase college attendance among financially disadvantaged and culturally diverse families."
The request to eliminate the minimum contribution was first brought to the Office of the State Comptroller by the Mayor's Office and NYC Kids RISE.
"The elimination of the minimum contribution to 529 college savings accounts is a huge step forward in making a college education more accessible to all of New York City's schoolchildren," said Julie Menin, commissioner of the Mayor's Office of Media and Entertainment and chair of NYC Kids RISE. "The NYC Kids RISE Save for College Program provides a platform to empower communities and families to save for their children's post-secondary education at a time when the cost of college is at an all-time high."
Jon Gray, co-founder with Mindy Gray of the Gray Foundation, said: "Mindy and I are proud to have worked alongside Comptroller DiNapoli, Mayor de Blasio, and other officials to make our state's 529 college savings plan more accessible and inclusive for all New Yorkers. We founded NYC Kids RISE on the belief that all children should have the opportunity to reach their highest potential. Opening up these college savings vehicles to more families will go a long way in helping NYC Kids RISE achieve its important mission."
"This is great news for children and families. As the first in my family to go to college, I understand the obstacles on the path to college and careers, and just how important it is for us to remove these obstacles and level the playing field for families," said NYC Schools Chancellor Carmen Fariña. "I'm proud of the work the city has done to remove obstacles, like eliminating the CUNY application fee for low-income students, offering the SAT free of charge during the school day, and investing in a college-going culture at hundreds of schools through College Access for All, and today's announcement and the Save for College Program build on this progress."
"This important change will open the door for many more New Yorkers to save for their future education," said Lorelei Salas, commissioner of the NYC Department of Consumer Affairs, which houses the City's Office of Financial Empowerment. "Child savings accounts coupled with financial education foster savings and spending habits that will help both in pursuing higher education and in achieving financial stability."
Studies have shown that students from families who save for college are much more likely to attend and graduate. Eliminating the $25 minimum contribution requirement for NY's 529 Direct Plan participants will allow families and loved ones who are only able to make smaller contributions to save for college.
Working with NY's 529 Program last fall, Mayor de Blasio, the Gray Foundation, Menin, Fariña and many others launched the NYC Kids RISE Save for College Program to help thousands of students in Queens District 30 save for college.
In addition to eliminating the minimum contribution, DiNapoli said NY's 529 Program investment fees will be reduced. The total asset-based fee for all Direct Plan portfolios will drop to 0.15 percent, meaning participants will pay $1.50 in program fees each year for every $1,000 invested in the plan. The maximum account balance will be increased from $375,000 to $520,000 for both the Direct and AdvisorPlans to more accurately reflect rising college costs.
Six new investment portfolios are being added to the Direct Plan's three age-based options. This will smooth the transition steps from more aggressive to more conservative investments as the beneficiary nears college age. More information can be found in the plan's brochure here.
New York's 529 program currently includes two separate 529 plans: the Direct Plan sold directly by the program and the Advisor Plan, sold exclusively through financial advisors. The New York State Comptroller and the New York State Higher Education Services Corp. are the program administrators and are responsible for implementing and administering New York's 529 College Savings Program
Read or download the Direct Plan disclosure booklet here or go to: http://cdn.unite529.com/jcdn/files/NYD/pdfs/DisclosureBooklet.pdf
Ascensus Broker Dealer Services Inc., serves as program manager and, in connection with its affiliates, provides recordkeeping and administrative support services and is responsible for day-to-day operations of the Direct Plan. The Vanguard Group Inc., serves as the investment manager. Vanguard Marketing Corp. markets, distributes and underwrites the Direct Plan.
The NYC Kids RISE Save for College Program is a scholarship and savings program designed to make college more accessible and achievable for all NYC public school students, starting with all kindergartners in School District 30 in Queens. The Save for College Program will allocate $100 NYC Scholarship Accounts to approximately 3,500 kindergarteners in School District 30 in the fall of 2017. Up to an additional $200 in matching funds will be added to each scholarship account during the Save for College Program's first three years. Some 10,000 children will be part of the initiative during this time.
There will be no cost to participate in the initiative, and every kindergarten student enrolled in public school in District 30 will be automatically enrolled in the program starting in the fall. Pending a successful pilot program, the Save for College Program's goal will be to expand and provide a universal scholarship account to every child in the New York City public school system. NYC Kids RISE, the nonprofit overseeing the program, plans to launch efforts to raise additional private funds to support the ongoing costs of the program and to explore opportunities to expand it. More information about NYC Kids RISE and the Save for College Program can be found at nyckidsrise.org.
For more information about New York's 529 College Savings Program Direct Plan, obtain a Disclosure Booklet and Tuition Savings Agreement at nysaves.org or by calling 877-NYSAVES (877-697-2837). This includes investment objectives, risks, charges, expenses and other information.