Maryland parents are calling lawmakers for help in fixing the problem of the state's 529 College Savings plan. A plan is on the way, lawmakers stated.
Maryland's 529 College Savings Plan is a state-sponsored investment plan that allows consumers to save money for a particular beneficiary and settle education expenses. Recently, the program encountered a system glitch that has resulted in hundreds of customers being unable to withdraw money from their accounts.
Head officials of the 529 savings plan explained that an "interest calculation error" had caused the problem plaguing Maryland parents and families who were reported to have lost tens of thousands worth of money, WTOP News reported.
'Scammed' by the state
Parents have been honest that they are prepared to sue if they cannot access all the funds promised as soon as possible.
Some parents expressed that they were not able to tap the funds they had saved for years.
Victoria Sansone was one of the parents hurt by the 529 savings plan. She attended the state panel Wednesday, where parents' challenges and concerns about suddenly having no money to pay their children's college bills were raised.
"This is scary. This is scary stuff. I am literally shaking in my seat. You guys need to help us correct this, and get our money refunded," Sansone declared.
Another parent, Vicky Eavers, whose daughter is heading off to college in the fall, shared she had lost almost half of her investment. She cannot believe the state could "pull the rug out from under us" in the eleventh hour.
Baltimore Inspector General Isabel Mercedes Cumming also invested in the 529 saving plans. She told The Baltimore Banner that when she was still a young prosecutor, she decided to open trust accounts for her sons, who were still babies then, to ensure they get some help paying for college. Considering the state-backed guarantee, she believed the money she invested would be safe and protected.
However, when she tried to "rollover" the balance from one of the prepaid trust accounts to a 401k-style investment plan that the state also oversees, she was shocked to know that she could only move the principal amount and not the earnings acquired for the past two decades since she started the program. The earnings, she was later informed by the agency staff, were "unavailable."
She was further told that she could only roll over $15,000 instead of her expected amount of $43,000.
Cumming's work has allowed her to investigate financial crimes, and in the situation that the 529 savings plan has placed her, she expressed her fears of never seeing her money again. Never had she thought that she could be "scammed" by her own state, she proclaimed.
State treasurer to take over
Senator Mike McKay narrated how they have been receiving calls from parents and people complaining about the 529 savings plan suddenly not working out. He described the current situation as a "disaster," and recognized the need and urgency to fix the problem, stating that not giving these parents "clarity is just a disservice."
State of Maryland's lawmakers announced that there is currently a bill to abolish the current board of officials handling the 529 savings plan and authorize the state treasurer to take over.
Maryland Treasurer Dereck Davis declared in the state hearing that his office is ready to take over and have control of the 529 savings plan. However, he gave out a condition - lawmakers should provide his office with additional funding and staff.
Further, he had also expressed that if the bill passes, he is now setting the expectation that the change will not happen overnight. The process will be long, provided that crucial issues need to be resolved, according to CBS News.
Lawmakers pledged to find a solution before the legislative session ends.
Related article: Three Ways To Save Up For Your Child's College Education
