COLLEGE SAVINGS 101

Savingforcollege.com

What is your state doing to promote saving for college?
http://www.savingforcollege.com/articles/what-is-your-state-doing-to-promote-saving-for-college-748

Posted: 2015-04-02

by Kathryn Flynn

State appropriations for higher education have been decreasing steadily in recent years, placing more responsibility on families to pay for college. In fact, in 2013, states spent 28 percent less per student than they did in 1988. On top of that, tuition prices continue to skyrocket, putting the idea of earning a degree out of reach for many students.

Yet limiting access to college doesn’t just affect individuals. Higher education is an essential part of the country’s future prosperity and economic mobility, which is why many states are actively trying to raise awareness about the importance of saving. This includes matching grants to 529 college savings plans, social media campaigns and even 529 plan enrollment assistance at local back to school nights. A 529 plan is an investment account, so if it is started when children are young, substantial growth can be achieved from a combination of tax-free earnings and compound interest.

Find 529 plans in your state

At this year’s College Savings Foundation Conference I had the pleasure of meeting Martha Savery, Director, Public Affairs and Communications, Massachusetts Educational Financing Authority (MEFA), Bruce Wagner, Chief Executive Officer, Finance Authority of Maine (FAME) and Rachel Biar, Assistant State Treasurer, Nebraska Educational Savings Trust (NEST), who have all graciously agreed to share their thoughts with us on the best ways to promote saving for college:

What is your state currently doing to promote the importance of saving for college:

Massachusetts
Martha Savery believes we need to create a sense of urgency around the idea of saving, especially for new parents. "We would like to eradicate the phrase 'I wish I had known', by helping young families begin at the beginning", says Savery. MEFA develops targeted messages to Massachusetts families based on their position in the college planning lifecycle. This includes email curriculum, social media tools, videos, webinars and calculators. To reach larger audiences, MEFA works with community organizations like schools and libraries, as well as Commonwealth stakeholders such as Departments of Elementary and Secondary Education and the Higher Education Treasurer’s office. MEFA also partners with Fidelity on many of these initiatives.

Maine
Since 2008, FAME has offered matching grants to residents who open a NextGen 529 account. However, only 40 percent of Maine parents who had babies within five years of the program’s launch took advantage of this “free” money. According to Bruce Wagner, they started a 529 plan because “they don’t want to leave money on the table.” In an effort to try and reach the other 60 percent, FAME is planning a massive social marketing campaign this year that will include everything from direct mail, brochures, television ads, Facebook and other web marketing tactics. They also partner with influential organizations including the Alfond Scholarship Foundation and Head Start programs. Existing NextGen account holders will be targeted during the “May is 529 Day” and “September is College Savings Month” campaigns.

Nebraska
NEST offers residents the chance to win a number of scholarships, including an annual “Why I Want to Go to College” writing contest for 7th and 8th grade students. Along with First National Bank of Omaha, NEST sponsors the yearly “Teach the Children to Save” program, which teaches approximately 1,3000 4th graders about saving, spending and sharing. NEST also sponsors NEST Financial Scholars for Students and Families, a free online tool that educates high school students, parents and grandparents on the most effective ways to save for college. Information on current programs being offered can be found in NEST’s quarterly newsletter.

What’s getting the best response from residents?

Massachusetts
MEFA aims to help “demystify and simplify” the process of saving for college, no matter where the family is in the college planning lifecycle. Utilizing social media channels in a more strategic fashion has helped them to reach different families based on the way they choose to receive information. Social media continues to be a crucial tool for MEFA to reach families, and so there has been a focus on being more creative and strategic in this area. For example, they recently redesigned their website, mefa.org, so that it is a more user-friendly format accessible from various devices.

Maine
It’s no surprise that the matching grants offered by FAME are highly popular. In fact, financial advisors say that the top selling point for the NextGen 529 plans is the matching grants offered. Matching grants are available when someone opens an account, makes ongoing contributions and signs up for automatic contributions. FAME had success delivering messages about investing in a child’s future, and reminding parents that if they don’t sign up for the state’s 529 plan and receive the matching grant they’re “leaving money on the table”. But perhaps the most successful campaign has been promoting online plan enrollment. Today, nearly 70 percent of all Maine accounts are opened online in as little as eight minutes.

Nebraska
The scholarship contests mentioned above draw in thousands of responses each year. NEST believes that saving for college is an investment and that families need to be ready to take the next step in planning for the beneficiary’s future. “Our marketing efforts help to encourage them to make that step and get started.”, says Rachel Biar.

You’re saying my financial advisor can help me plan for college?

What hasn’t worked?

Massachusetts
In the past, plan administrators found the best way to reach families was by hosting events at local schools and libraries. However, according to Martha Savery, Director, Public Affairs and Communications at MEFA, "Over the past five years, we have seen attendance at these programs decrease and although we continue to offer seminars in select locations, we found social media outlets to be far more efficient and effective."

Maine
FAME has efforts to try and meet residents in person to provide information or help with enrollment applications. This type of engagement was only proven to be effective when certain incentives were offered. For example, the “casting call” promotion, which drove in 15 percent of new applicants, offered parents a free picture of their child. Yet when FAME ran a similar promotion, except with a $10 cash incentive, the results were quite different. “Perhaps because people were skeptical that it was too good to be true, or that the $10 was not enough of a draw”, says Wagner.

Nebraska
The success of NEST’s programs varies, and can be attributed to account growth as well as the age of the accounts in their plans.

How do you encourage continuous saving?

Massachusetts
The core message of MEFA’s philosophy includes phrases such as “save early and save often”, “the benefits of savings versus the cost of borrowing”, the importance of the time value of money”, “save where you are currently spending”, “use milestones to increase your savings” and “auto debit is a great way to save”.

Maine
FAME knows that money talks. They just recently upped the matching grant for those who sign up for automatic deposits from $50 to $100. To make sure account owners actually make repeat deposits, the award doesn’t kick in until six consecutive contributions are made. They’ve been promoting the incentive through financial advisors and a direct mail campaign that includes the enrollment paperwork.

Nebraska
To encourage continuous saving, NEST provides regular communications to customers that include information on how to set up Automatic Investment Plans and payroll deduction.

Have you learned anything from other states?

Massachusetts
Over the years, MEFA has learned the value of sharing best practices and innovations with other state programs. A common roadblock among many states has been getting through to young families. Discussions at meetings and conferences with colleagues from across the country has influences MEFA’s activities as well as their messages to residents.

Maine
With the success of their matching grant programs, Maine has become a source of learning for other states, especially in the New England area specifically. However, they still have room for improvement so they look to the other states for help with social media, social gifting and grassroots efforts for enrollment assistance. Although FAME wants to remain an integral part of the student experience by helping with SATs and the FAFSA, the more important goal is to get parents to open a 529 account when the child is younger. One specific idea is their “start saving now that your child is going to kindergarten’ campaign.

Nebraska
The collaborative nature of the College Savings Plans Network and various other conferences have proven to be very beneficial for NEST. The training provided at these events are a great opportunity to learn from peers.

A tax strategy that will surprise you

State appropriations for higher education have been decreasing steadily in recent years, placing more responsibility on families to pay for college. In fact, in 2013, states spent 28 percent less per student than they did in 1988. On top of that, tuition prices continue to skyrocket, putting the idea of earning a degree out of reach for many students.

Yet limiting access to college doesn’t just affect individuals. Higher education is an essential part of the country’s future prosperity and economic mobility, which is why many states are actively trying to raise awareness about the importance of saving. This includes matching grants to 529 college savings plans, social media campaigns and even 529 plan enrollment assistance at local back to school nights. A 529 plan is an investment account, so if it is started when children are young, substantial growth can be achieved from a combination of tax-free earnings and compound interest.

Find 529 plans in your state

At this year’s College Savings Foundation Conference I had the pleasure of meeting Martha Savery, Director, Public Affairs and Communications, Massachusetts Educational Financing Authority (MEFA), Bruce Wagner, Chief Executive Officer, Finance Authority of Maine (FAME) and Rachel Biar, Assistant State Treasurer, Nebraska Educational Savings Trust (NEST), who have all graciously agreed to share their thoughts with us on the best ways to promote saving for college:

What is your state currently doing to promote the importance of saving for college:

Massachusetts
Martha Savery believes we need to create a sense of urgency around the idea of saving, especially for new parents. "We would like to eradicate the phrase 'I wish I had known', by helping young families begin at the beginning", says Savery. MEFA develops targeted messages to Massachusetts families based on their position in the college planning lifecycle. This includes email curriculum, social media tools, videos, webinars and calculators. To reach larger audiences, MEFA works with community organizations like schools and libraries, as well as Commonwealth stakeholders such as Departments of Elementary and Secondary Education and the Higher Education Treasurer’s office. MEFA also partners with Fidelity on many of these initiatives.

Maine
Since 2008, FAME has offered matching grants to residents who open a NextGen 529 account. However, only 40 percent of Maine parents who had babies within five years of the program’s launch took advantage of this “free” money. According to Bruce Wagner, they started a 529 plan because “they don’t want to leave money on the table.” In an effort to try and reach the other 60 percent, FAME is planning a massive social marketing campaign this year that will include everything from direct mail, brochures, television ads, Facebook and other web marketing tactics. They also partner with influential organizations including the Alfond Scholarship Foundation and Head Start programs. Existing NextGen account holders will be targeted during the “May is 529 Day” and “September is College Savings Month” campaigns.

Nebraska
NEST offers residents the chance to win a number of scholarships, including an annual “Why I Want to Go to College” writing contest for 7th and 8th grade students. Along with First National Bank of Omaha, NEST sponsors the yearly “Teach the Children to Save” program, which teaches approximately 1,3000 4th graders about saving, spending and sharing. NEST also sponsors NEST Financial Scholars for Students and Families, a free online tool that educates high school students, parents and grandparents on the most effective ways to save for college. Information on current programs being offered can be found in NEST’s quarterly newsletter.

What’s getting the best response from residents?

Massachusetts
MEFA aims to help “demystify and simplify” the process of saving for college, no matter where the family is in the college planning lifecycle. Utilizing social media channels in a more strategic fashion has helped them to reach different families based on the way they choose to receive information. Social media continues to be a crucial tool for MEFA to reach families, and so there has been a focus on being more creative and strategic in this area. For example, they recently redesigned their website, mefa.org, so that it is a more user-friendly format accessible from various devices.

Maine
It’s no surprise that the matching grants offered by FAME are highly popular. In fact, financial advisors say that the top selling point for the NextGen 529 plans is the matching grants offered. Matching grants are available when someone opens an account, makes ongoing contributions and signs up for automatic contributions. FAME had success delivering messages about investing in a child’s future, and reminding parents that if they don’t sign up for the state’s 529 plan and receive the matching grant they’re “leaving money on the table”. But perhaps the most successful campaign has been promoting online plan enrollment. Today, nearly 70 percent of all Maine accounts are opened online in as little as eight minutes.

Nebraska
The scholarship contests mentioned above draw in thousands of responses each year. NEST believes that saving for college is an investment and that families need to be ready to take the next step in planning for the beneficiary’s future. “Our marketing efforts help to encourage them to make that step and get started.”, says Rachel Biar.

You’re saying my financial advisor can help me plan for college?

What hasn’t worked?

Massachusetts
In the past, plan administrators found the best way to reach families was by hosting events at local schools and libraries. However, according to Martha Savery, Director, Public Affairs and Communications at MEFA, "Over the past five years, we have seen attendance at these programs decrease and although we continue to offer seminars in select locations, we found social media outlets to be far more efficient and effective."

Maine
FAME has efforts to try and meet residents in person to provide information or help with enrollment applications. This type of engagement was only proven to be effective when certain incentives were offered. For example, the “casting call” promotion, which drove in 15 percent of new applicants, offered parents a free picture of their child. Yet when FAME ran a similar promotion, except with a $10 cash incentive, the results were quite different. “Perhaps because people were skeptical that it was too good to be true, or that the $10 was not enough of a draw”, says Wagner.

Nebraska
The success of NEST’s programs varies, and can be attributed to account growth as well as the age of the accounts in their plans.

How do you encourage continuous saving?

Massachusetts
The core message of MEFA’s philosophy includes phrases such as “save early and save often”, “the benefits of savings versus the cost of borrowing”, the importance of the time value of money”, “save where you are currently spending”, “use milestones to increase your savings” and “auto debit is a great way to save”.

Maine
FAME knows that money talks. They just recently upped the matching grant for those who sign up for automatic deposits from $50 to $100. To make sure account owners actually make repeat deposits, the award doesn’t kick in until six consecutive contributions are made. They’ve been promoting the incentive through financial advisors and a direct mail campaign that includes the enrollment paperwork.

Nebraska
To encourage continuous saving, NEST provides regular communications to customers that include information on how to set up Automatic Investment Plans and payroll deduction.

Have you learned anything from other states?

Massachusetts
Over the years, MEFA has learned the value of sharing best practices and innovations with other state programs. A common roadblock among many states has been getting through to young families. Discussions at meetings and conferences with colleagues from across the country has influences MEFA’s activities as well as their messages to residents.

Maine
With the success of their matching grant programs, Maine has become a source of learning for other states, especially in the New England area specifically. However, they still have room for improvement so they look to the other states for help with social media, social gifting and grassroots efforts for enrollment assistance. Although FAME wants to remain an integral part of the student experience by helping with SATs and the FAFSA, the more important goal is to get parents to open a 529 account when the child is younger. One specific idea is their “start saving now that your child is going to kindergarten’ campaign.

Nebraska
The collaborative nature of the College Savings Plans Network and various other conferences have proven to be very beneficial for NEST. The training provided at these events are a great opportunity to learn from peers.

A tax strategy that will surprise you

 

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