Go ahead and I am never very good at, uh, gracefully beginning the presentation, so hope you’ll, you’ll bear with me here. Okay? So, um, again, welcome to the same college webinar. Um. We are, I love talking about saving for college. It’s my favorite thing to talk about. Uh, I’ve been at MEFA for over 20 years, and most of that time worked with the savings program, the U Plan and the U Fund.

And, uh, again, love talking about saving for college because, uh, it’s just, uh, good. Right. You know, we can talk about comparing loans, we can talk about financial aid and how to sort of, um, you know, m maybe minimize costs and whatnot, but really saving and taking that proactive approach is always good. So, um, presumably, you know a bit about MEFA if you’re here, but just in case, we are the Massachusetts [00:01:00] Educational Financing Authority.

We were created by the Commonwealth of Massachusetts back in 1982, and we have a public service mission to help families to plan, save, and pay for college and career readiness. And so, uh, what we were initially created to do was offer a loan, which is something that we still do, obviously. However, of course, since 1982, as you may have noticed, the cost of college has continued to rise.

And, um, one of the first ways that we expanded that mission aside from just offering loans, is to offer a savings program, which is the U Plan, prepaid tuition program, which we initiated in 1995. That was pre 5 29. Um, so we were one of the, one of a few states that offered prepaid tuition plans before the National 5 29 program took over.

We also, of course, offer, um, the, that the, the Massachusetts 5 29 plan that you fund. And we do a lot of outreach like this, uh, and education and guidance on all topics related to planning, saving, and paying for college and career readiness. So what we’ll talk about today [00:02:00] is why you should save. And this is some of the things that we tell families.

This is, most of this is what we are, you know, telling families as well, and hopefully families with younger children, but really families at any point why it’s important for them to save. Um, that help. That that does the impact that it does not have on financial aid, uh, eligibility. We’ll talk about two specific Massachusetts options, which are the programs that I just mentioned, the you Plan, preppa tuition program, and the U Fund, Massachusetts 5 29 plan.

Although always quick to say that the best way to save is the way you actually do save. I’m not here to necessarily sell you on the programs. Um, but we do know that there are ways to save specifically for college that go a little bit further, uh, than just saving in a bank account when used for college.

And we talk about that, those, the, uh, these options as being examples of those. We’ll talk about strategies for savings. So what we know some folks have done that has, um, [00:03:00] been rewarded, you know, how, how they have successfully saved. And then finally we’ll talk about how families pay for post-secondary education.

So anything after high school, right? So the, the. College or college or career training. Um, people really don’t know. I mean, I, I always talk about the fact that I’ve been at MEFA for almost 25 years now, and so I’ve talked to a lot of families and the most common question you get is simple enough. And that is, how do people do this, right?

They get to the point of paying for college and they don’t know how people pay these college bills that they have. So we’ll talk about that, how they do that, and what’s the real cost of college or, um, uh, yes, the cost and, and, and the value of it. So, um, I, I don’t think I mentioned this earlier, but uh, if you have questions, submit them through the q and a.

Um, it’s easier for me to see as we go through. You can also transcribe the meeting as I know someone’s already done, so you can click on that caption if you wanted [00:04:00] to, to do that. And as I mentioned once before, if you’re late coming in. If you registered, you will get a, a recording of the presentation as well as a copy of the slides emailed to you, um, either by the end of the week or early next week.

So, um, if you have questions, don’t be shy. Um, ask, ask away. Okay. And again, you know, part of this is why, well, I wanna mention this. Uh, this is what we tell families for the most part. So you’re getting a lot of the same content in the same order that we, uh, do when we’re talking to families. And so the most important thing that we want to address, we do right up front is some of the common myths that we’ve heard about saving for college and, and why it’s not, um.

Why, why these myths should be busted and why, you know, these things can prevent or delay people from beginning to save and they should not. So the first one that we hear all the time is my [00:05:00] savings will hurt my financial aid. It’s funny, you know, I don’t hear it quite as much as I used to, but I used to hear it.

All the time. I mean, not just at work too. I mean, when I told people what I did for a li what I do for a living, they, they, you know, talk about savings and how savings hurt their financial aid. It’s really not true. Right? Most people have this idea, it’s not the case. There are two ways that you award financial aid at the college level.

One of them is merit based financial aid. That’s not based on finances at all. That’s based on recognition of student achievement. So academic scholarships, athletic scholarships, things like this. This is not based on how much a family has saved for college at all. Um, the second way, and the more, more common way, admittedly, is need-based financial aid.

So not merit-based financial aid, but need based financial aid. And that does take into account assets. You know, what a family might have in assets, but the reality is they take. That family assets, specifically the parent assets, which is, um, you know, the vast majority of saving for college, if it’s done especially through a [00:06:00] 5 29 or a pre-PA tuition program, is done by the parent, um, and not the student.

So parent assets are taken at a very small percentage when it comes to calculating financial aid eligibility, right? So they take all the PA parents’ assets and, uh, the most, the highest percentage of, uh, that they will assess assets at is 5.6%. So that means if you have $10,000, uh, saved, you know it’s going, they’re going to expect you to pay $560 of that.

So it does, do they take that into account? Yeah, they do a little bit, but a very small percentage. Um, so it, it doesn’t come anywhere close to wiping out the benefit that you actually have in, uh. Accrued by saving in, in the first place. So I think most people would rather have the $10,000 saved to pay for college than, uh, have to expect to pay $560 out of it or have that, have that, uh, financial aid lessened by [00:07:00] $560.

So it really has a minimal impact on your financial aid eligibility. And then the other one is if it’s not worth saving for college if I can’t save the entire cost. And so this is something that I think causes a lot of paralysis for people when they see, especially on the news that college now costs X amount of dollars every year.

And we’ll talk about this near the end of the presentation. You know, you always see the highest sticker price costs. These things don’t take into account financial aid. I remember when my child was born and my, uh, colleague said, let’s see how much college is gonna be for him when he turns 18. And we did the MEFA Future College cost calculator, which just shows you how much tuition and fees or whatnot are going to be at particular types of college given the rates of increase of tuition, um, over the years.

And, and they sort of estimate. And we estimated 18 years out and it was a really high number and I had that immediate reaction that anybody would have, which is, there’s no way I can pay that. But after a minute, I thought, since I work at MEFA, I know this. That’s not the number that I am [00:08:00] going to be asked to pay.

Right? There is financial aid available. Most families are eligible for some level of financial aid. Um, and anything that you save now is something that you don’t have to borrow later on. So hopefully aid takes a good chunk of that. Savings is an important piece to paying the rest. So in general, um, saving for college, I mentioned that first is just good.

It’s just an unalloyed good, right? So it will give you more education options in terms of the different types of colleges that you can look at. Um, you know, can increase the range of costs that you can potentially absorb. We also find that, you know, when it comes time to fill out financial aid forms or admissions forms, people who have saved, and we’ve thought about this even just a little bit, um, have an easier time navigating that process.

Emotionally, it’s not as daunting because they know they have saved something so they don’t feel, uh, completely unprepared. Um, really the [00:09:00] biggest thing is it reduces or eliminates the need to borrow loans. And even if you do have to borrow some loans to to pay. If you do have some saving and you’re able to not borrow as much as you would have needed to, uh, that can pay big dividends as well as we’ve already seen.

It has a minimal impact on financial aid eligibility and just having a 5 29 plan, for example, uh, there’s a lot of research on this is. Linked to increased attendance and graduation rates for students in college. And so that is true. No matter, um, the student’s economic level, socioeconomic, uh, level or the amount that you have actually saved, even saving, um, below $500 has an outsized impact on the student’s likelihood of attending and graduating college.

So, and there’s all sorts of benefits that come with saving for college, um, you know, for social emotional learning for students and, [00:10:00] um, you know, families, wellbeing, mothers, uh, psychological wellbeing, for example. All sorts of research being done on this front. Uh, so again, saving for college even if you’re saving just a little bit, is definitely worth it.

Okay. Before I get into the Massachusetts options, I wanna check and see if there’s been any q and a. No, no questions yet. Okay. Well if you have them, put ’em in the q and a. Um, okay. So now that we know savings is great, um, how do we go about savings? Again, I’ll say any way that you save is good. Better than not saving at all our specific saving for college options.

Uh, first we’ll talk about the 5 29 plans. 5 29 plans have really become, um, sort of the college savings vehicle or college investing vehicle of choice for most families, probably the most popular and most well understood and known about ways to pay for college. So, 5 29 plans. Just by way of background, they were, uh, created in 1996, signed into law by then President Clinton.

Um, and the aim was to create a [00:11:00] federally tax advantage way to save for college. So, sort of like a 401k saves for retirement with tax benefits of 5 29 saved for educational expenses, a college, uh, when it was created. Um. To, to, to pay for college, uh, in a tax advantage way. So, um, once that legislation was signed, each state was then charged with creating their own 5 29 plan.

And so each state did that. The one in Massachusetts, again is the Meha U Fund. Um, and so some features of five 20 nines that may vary from state to state include the account limit. So there’s a, a limit that you can have in your account and once you reach that point, you’re not, uh, able to put any more into your 5 29.

Um, each state will have various investment options. So, uh, we as you’ll see, have partnered with Fidelity Investments to service the YOU Fund. And so they manage the accounts and the, um, investments and, uh, each state will of course have their own state tax policies regarding 5 29 [00:12:00] contributions, tax deductions, and, and, uh, distributions.

Again, uh, for Massachusetts, uh, this is the Massachusetts, the Mefa 5 29 plan. The U Fund, um, as I just mentioned, it’s professionally managed by Fidelity. Um, has been since 1999 when we initiated the plan. And we are very happy and very proud that we are one of only five states with a gold medal rating from Morningstar.

That’s, uh, uh, regarding the, the investments and the bonds, um, uh, the investments that is. And, uh, so we’re very happy about that. So again, one way that you can compare different plans from state to state, because just ’cause you’re in Massachusetts doesn’t mean you have to choose the Massachusetts 5 29 plan.

Um, one of the ways that you might, uh, look to, to sort of judge is how the performance of the investments. And so, um, again, we are one of only five states that has the highest rating, uh, from, from the rating agency Morningstar. [00:13:00] So again, very happy about that. Very, very pleased to be able to say that. And how the U Fund specifically works is this, you open an account at uh, fidelity.com/u fund.

You can also get there from the Mefa site. Um, and you know, you designate an owner who’s gonna be the adult that is in control of the account. Um, what type of account is it that you’re looking for, um, who the student is, um, and then how you want funds invested. And so once that’s set up, you actually, you don’t have to put in money when you, um, open the account.

You can open an account with no money, which you’ll see in a minute. But, um, you put your funds in and it’s invested in the market. And so the funds grow without taxes. And when you go to use the funds, as long as you use them for qualified educational expenses, uh, you don’t pay taxes on the earnings. So that is your tax advantage way to save for college and education in general.

Um, so a couple of. [00:14:00] Specific features of the U Fund. I wanted to mention there’s no annual account maintenance fee. And what that means is that there’s not a fee that you’re gonna have to pay out of pocket every year to do this. There are fees associated with the U fund as there are with every 5 29 plan, but the fees are taken out of the earnings.

So I can tell you as somebody who has two U fund, 5 29 accounts myself, um, there’s no, I, I well that there are fees, of course, I don’t know what they are, right? I don’t know, because I’m not looking at every statement and seeing how much they’re taking out of my, my earnings. Uh, there’s not a fee that you have to pay out of pocket.

And again, there’s no minimum investment. So it used to be that you would have to pay $50 to begin a youth fund account that’s been eliminated. You can open an account with as little as no money at all, uh, and choose to fund later. So that’s just, again, trying to lower any barriers that may exist for anybody who wants to save.

Now again, uh, one of the, one of the, um. Points in this application is that you do [00:15:00] have to choose how you want your funds invested, and you can choose from various options that Fidelity offers you. If people have questions about that, they can talk to Fidelity and Del Fidelity can explain the options, maybe get a feel for, you know, your, your comfort level with certain, um, levels of risk or not, and, and proceed from there.

Um, so, um, they’re actively managed portfolios, index portfolios, and FDIC insured options savings can be used at any accredited college or university nationwide at even some international colleges. So again, just ’cause you’re in Massachusetts or using the Massachusetts Youth Fund doesn’t mean that you have to choose a college in Massachusetts, any accredited college in the country that can take federal aid, even international colleges that can take federal aid.

Um, you’re eligible to use your youth fund and still retain your tax benefit. Um. Yeah, annual contribution limit of over, uh, of $20,000 a year. That’s your annual [00:16:00] limit that you can put in, uh, before you start to incur a gift tax. And no additional con contributions permitted once the beneficiary has completed and, uh, uh, has, I’m sorry, a combined account maximum of $500,000.

So, um, if you have a, uh, an, uh, a u fund account and you’ve got $500,000 or over on it, um, then you know, you’re, you’re not, uh, able to put any more funds in. And that is something that, that limit is something that is revised. Both the annual contribution and the total contribution limit is revised from time to time based on the average cost of college, uh, in Massachusetts because it is something that, um, will also.

Differ from state to state. I have some questions here, which is great. Uh, somebody wants to know, can a grandparent open a 5 29 account for their grandson or granddaughter? Yes. So there does not have to be a specific, uh, relationship to open a 5 29. Certainly parents open them for children all [00:17:00] the time, but grandparents for grandchildren, aunts, uncle, I have a one for my nephew.

Uh, or a family friend. You know, there, there, there doesn’t have to be any specific relationship. Um, so somebody wants to know they, uh. How can I advise? So somebody who works in Massachusetts and want to be able, wants to be able to help families, they wanna know if, uh, starting in ninth grade, is it too late?

Absolutely not. Um, I say, you know, the earlier you can start the better of course, but I would never, never say it’s too late for people. I mean, I’ve advised people to open up 5 29 accounts in their senior year of high school or when they’re in college. Anything that you’re saving, as I said, is something that you don’t have to borrow.

And yes, there is value hopefully that’s being, uh, added to these accounts at a compounded level. So, uh, just ’cause they only have four years, that’s, that’s not too late. It’s, it’s actually pretty good. Um, yeah. Okay. So somebody wants to know [00:18:00] there’s a yearly cap on 5, 2 9 contributions. We just got to that.

And then also, is it pre-tax or post-tax contribution? That’s a good question. It is post-tax contribution. So these are, there are no pre-tax contributions to, uh, to five two.

Okay, good questions if I can get this going here. Okay, so remember I said that as long as you use these funds for a qualified educational expenses, you don’t pay taxes on the earnings. So what are qualified educational expenses? There are things like tuition fees, housing and food books, and required equipment, uh, at.

Any participating college or any available college. So any accredited college that is, uh, eligible to take us federal funding. So that’s a lot and it’s a lot of different expenses that you can use at a lot of different places, but it’s not just college too. That’s the other thing that’s really important to note.

You can use up to $10,000 in, uh, 5 29 funds to pay for costs related to apprenticeships. [00:19:00] Um, just beginning last year, you can use 5 29 plans for credentialing programs and, you know, career training programs and expenses related to those as well. So, um, a huge list of, of, uh, programs there. Also, there was an expansion some years ago to increase 5 29 usage to K through 12 expenses.

So tuition, books, tests, fee test fees, tutoring and therapies for K through 12 education up to $20,000 a year. That’s a huge benefit of the year that, that, that’s one that I’m using myself, uh, for my student who’s in sixth grade right now. And, um. You can use, uh, take a one time distribution of up to $10,000 to repay, uh, federal student loans as well.

So there’s a lot of expenses that you can use for five, you can use 5 29 plan, uh, money for, and still be eligible to claim that tax benefit. Uh, so if you’re not able to do that, what happens? Right? What happens if you [00:20:00] take out money for ineligible expenses? You can do that. You can take those funds out. Um, but there’s, you lose that tax benefit, first of all.

So the earnings, there are, there are two penalties that come with, uh, using 5 29 plan money for, uh, ineligible expenses, but they’re both related to the earnings, not to what you put in to the 5 29 plan. And so those things are as follows, that, uh, there’s a 10% penalty on the earnings and the earnings will be taxed at the owner’s rate of income.

Now there are. Three exceptions for the 10% penalty on the earnings. And that is if a student dies or becomes disabled or the student gets a scholarship, uh, either one of those, those things, you’re not paid. I’m sorry, you’re not charged the 10% penalty on the earnings. Of course, two of those things are, are, are terrible and we don’t wanna really contemplate it.

But if, if you get a scholarship and you can’t use the funds that you’re eligible, uh, I’m sorry, you [00:21:00] can’t use the funds in an eligible way because of that, you’re not assessed the 10% penalty on that scholarship amount. Um, but even in those three cases, the earnings will be taxed at the owner’s rate of income.

Okay, now. I wanna mention one other thing and then I’ll get to, I see some other questions here. Um, one other expansion and there’s been a lot of expansions to five 20 nines in recent years, which is great. Um, but one key thing that people are really excited about is that, um, if you save for your child and your child doesn’t end up going to college and you don’t wanna sort of, you know, take funds out and, and get taxed on those earnings, you can begin to transfer those funds over to a Roth IRA for that beneficiary and start saving for that beneficiary’s retirement.

So, um, a couple of. Things there. I mean, first of all, that’s huge. You know, people always have that question of what happens if the child doesn’t go to school well, that if the child doesn’t go to college, then you have this option. Um, and people have responded really [00:22:00] positively to it. There’s a couple of wrinkles here, or some features that, that are, are contingent on this, and that is the Roth IRA that you’re setting up has to be for the same beneficiary as the person you set up.

The 5 29 plan for the 5 29 account must have been open for at least 15 years. So again, think about that story you set, uh, 5 29 up for a child when they were young. When the time comes, they’re not gonna use it. What can you do? The transfer amount must have come from contributions made at least five years prior to the transfer.

The amount transferred annually is limited to the Roth IRA con contribution limit, which is $7,000 per year. And the maximum amount transferred overtime cannot exceed $35,000. Um, and so, you know, according to the 2024 College Savings Indicator study, which is a study that Fidelity does, 48 respondents, were not aware that 5 29 funds could be rolled over to a Roth.

IRA. As I said, it’s pretty new. [00:23:00] Um, so, so, and people like that. So it’s a good thing to know. Um, and I’ll just do this one slide. I wanna tell you about the Baby Steps program. Uh, the Baby Steps program is something that was initiated by the state of Massachusetts in 2020. It started January 1st, 2020, and it is the first statewide seeded child savings account in Massachusetts.

And so what that means is that through the Baby Steps program, uh, the Massachusetts Treasury has set aside $50 for every baby born or adopted in Massachusetts to be able to claim by opening an account, um, a youth fund account, which they have one year to do. So if your baby resides in Massachusetts, or adopted child resides in Massachusetts, they have one year from birth or adoption to open a 5 29 account.

So you would open that for them, uh, or somebody would open that for them as the beneficiary. And then within, you know, four to six weeks or so, [00:24:00] uh, they would get that $50 seed. Right into their account. And so that is, uh, again, a program that’s now entering its sixth year and it’s been going really strong.

And it’s one of many programs that have popped up, uh, around the country. Like it, you know, there are programs in Rhode Island, there’s programs in Maine, there’s programs in the city of Boston, San Francisco, uh, New York City. So these programs have become really popular, um, over the past 10, 15 years or so.

And, um, you know, part of what I was quoting earlier about the benefits of 5 29 savings, uh, really popped up in response to these things. You know, there’s a lot of studies going on about the benefits of 5 29 and 29 accounts among, um, you know, low to middle income people, but everybody in general. And so that’s where we’re seeing a lot of this information from the benefits of 5 29 and college savings come from.

Okay. Now we have a few more questions. I’ll get to them.[00:25:00]

Do you have any idea of how much is the monthly interest accrued? That’s a great question. That really depends on the investments, right? And the market. So the 5 29 money is invested in the market, and so it depends on how the market does in general, and then also how your particular investments are doing in your investment strategy.

And that’s something that you can talk to Fidelity about. Uh, so it really depends on a couple of different factors. Um, could an adult open a 5 29 account if they wanna plan for future studies? Yes. Yes. You can open a a 5 29 account for yourself, with yourself as the owner and the beneficiary. Uh, are you able to talk about the 5 29 versus the ugma?

It seems like Del Yeah. Fidelity offers both options. Um, but both are viewed as college savings plan, so yeah, I, I can talk about that. Um, agma Agma Upma plans, uniform Gift to Minor Act or Uniform Trust to Minor Act and 5 29. Um, so they are different, [00:26:00] uh, in, in a couple of key ways. Um. First of all, and, and you can set up a 5 29, that’s a either one of the first questions I’ll ask you when you’re setting up a 5 29, is it an individual 5 29 account or is it an AGMA or a custodial account?

So if you have money that you have liquidated, for example, from A-U-G-M-A or A-U-T-M-A account, and that money has to be invested in according to those rules, you can open up a 5 29 that that is an ugma UTMA account. Um, or, or you can open up an individual account if you’re just opening up an account.

And so the big difference between those two options are that with an UGMA or an TMA account, once the beneficiary attains a certain age, there’s 18 or 21, they become the owner of that account. Um. So they are in control of the account, which is different than an individual 5 29. The owner designated at the beginning of [00:27:00] the account setup always has control of the account.

So, um, that’s the big difference between those, those two. And then your individual account is not, you know, sort of governed by the rules of the previously existing AGMA Orma account. The other thing I wanna mention too is that they’re treated differently in terms of financial aid. So if, if, um. Somebody has an UGMA or an TMA account that is a student asset when it comes to financial aid versus a 5 29, which if it’s owned by the parent, is a parent asset.

If it’s owned by a grandparent, it’s nobody’s asset. Um, so it doesn’t get looked at at all on the fafsa, for example. Um, but for the, the parents, it’s a parent asset. And so remember I said that they’ll take 5.6% of total parent assets into account when they’re figuring out how much you can pay for college.

For a student asset that’s 20%. And so an ugly or not, my account would be counted heavier, um, and and affect your financial aid more than it would, um, [00:28:00] if it were a parent asset. Um,

I’m gonna wait on that last question here, um, because I just wanna go, go on and we can, we can discuss that later, but, um. We wanted to tell you one more thing. This is a really new program that we have. It just started last month, again, January 1st, 2026, which is the next steps program. So I just mentioned Baby Steps where they seed in $50 for every child in Massachusetts, which they you have until they’re one to claim or the first year of adoption.

Well. For the next Steps program. It kind of grows from that in a way. If you have a child who is not eligible for the Baby Steps program, so if you’re setting up an account for a, a youth fund account for a child who’s over one, um, but is between the ages of one and three, then they’re eligible for the next steps, uh, program and that, and they, and they’re Massachusetts residents as [00:29:00] well.

And what that is, is instead of a seeded $50, it’s a matched $50. So once you put in $50, the next Steps program will match $50 in your account to help grow that account. Uh, so that is new. And again, it’s, it’s meant to spur people to save, uh, and to help those who are saving. And so we’re excited about that expansion, uh, into the program.

And this is, as I said, about a month or so old. So we’re gonna just start to see those, um, eligible accounts start receiving funding shortly. Uh, but again, just more to, to help sort of programs and, and balances grow. The other program. Um, though I should mention too, one other thing about the 5 29 plan, if you’re not able to use the funds for the beneficiary in the way in which you intended, you can transfer those funds over to another beneficiary within the family.

So if there’s a, another sibling, uh, a cousin, uh, even to, to a parent, [00:30:00] oh, um, another parent, you, you can do that as well. Uh, and, and that’s also a key of this program, the, uh, the U plan. So this is our second. Savings program that we’re gonna be talking about though. It’s the first one chronologically. So how the U Plan works, it’s different than the U Fund.

Uh, it’s a little trickier to understand at first, but uh, if you stick with it, it’s a great, you, you’ll get it. It’s a great program. It took me a while. I, you know, when I first started working at mefi, was only doing loan work and I know much about the U plan. It seemed confusing. Then I started working with it and we started working with the accounts specifically.

So I would talk with u Plan customers and, and be looking at their accounts and they had questions and, and helping them direct funds and stuff. And I saw what a great program it really was. Um, so it’s worth it to, to sort of, um, to try to understand it. It is a prepaid tuition program, and it works in a fundamentally different way than the 5 29 plan does, where the 5 29 plan, the value grows from your investments.

The U plan has a different aim, [00:31:00] although the investments do grow. Um, it allows you to prepay up to 100% of tuition and mandatory fees at participating colleges, right? So all the participating colleges are in Massachusetts and there’s a large network of public and private colleges that participate in the plan.

There’s over 70, uh, participating colleges, and I’m pretty sure we have them on a slide later on. Um, but basically your, your money is not invested in the market as it is in the, in the U Fund, so it’s free of market vol volatility. It is invested in general obligation bonds that are backed by the full faith and credit of the Commonwealth.

And so you put funds into this plan, the minimum is $300 to purchase. A certificate. Um, you can open an account again throughout the year, just like the you fund, you can contribute to that account throughout the year. And then there’s an annual bond purchase that happens August 1st, and they take all the money that you have invested in the plan, plus any interest that’s accrued on that, [00:32:00] and that goes towards the bond purchase.

So if there’s less than $300 in your account at the time of that bond purchase, which is again August 1st, you’re not gonna lock in a percentage of tuition that year. But if you’re, if you’re adding funds to that and next year it’s over $300, then you will lock in whatever percentage of tuition that pays.

So, um, I’ll, I’ll sort of, let me see if I can, uh, explain the program a bit. Um, so this is generally how it works. You put in. Whatever amount of money that you’re going to put in. Let’s say to keep it easy for me, I’m not a math guy, so, uh, let’s say it’s a thousand dollars. Okay? So throughout the year I’ve opened this account, I’ve put in a hundred dollars every month, and, uh, at the time of the bond purchase, I have a thousand dollars.

So that means my $1,000 is going to purchase whatever percentage of tuition that is this year at each participating college and [00:33:00] university. Now, every college has a, a different tuition and fee figure, so that $1,000 is going to buy a different percentage at every college. You don’t have to pick a college up front.

You’ll be notified though what percentage you have at each college. So let’s say, uh, there’s a college that costs $10,000. I put in a thousand dollars. That means I purchased 10% of tuition at that college. And let’s say my child goes to college in 15 years. Well, 15 years from now, if it’s $10,000 this year, 15 years from now, it might be, uh, $30,000.

Right. So if that’s the case, I’ve got 10% of $30,000 or, or 3000. So my $1,000 investment became $3,000 because it kept pace with the increase intuition at col, at those participating colleges. Um, and so every year you can put more funds in, uh, and add to your percentage, uh, up until a certain point. Uh, it takes five years for the bond to.[00:34:00]

To, um, mature at least five years so you wouldn’t be able to put money in and have it mature next year. So the person who asked, you know, there is, if ninth grade was too late to open a 5 29, no, but it might be too late to open up a u plan and say, be able to save for every year. You could open up a u plan at, you know, uh, in ninth grade and have money for the child’s senior year in college.

Um, but not for the freshman year because it’s within that five year minimum, uh, that the bonds need to mature. So when you’re setting up your U plan, just like the U fund, you pick. Then the, the owner who’s gonna be in charge of the account, the student who’s the beneficiary, and then what year or years you want to use this money in.

And so you want to pick one or more of the years that the student, the student is anticipated to be in college. Um, and again, those, those available years to choose [00:35:00] from begin five years from the year that you’re. Putting it, uh, in, and they, they end, I wanna say it’s 20, 21 or 22 years out. Uh, I’m not, I’m not a hundred percent sure, but, um, but yeah, that’s, that’s essentially the, the window that you have.

Um, and again, every year you put money in, you can add to those. Years as long as they’re available the year that you’re putting funds in. So the obvious question that people have, the, the, you know, the, the, the great thing about the U plan is it keeps pace with tuition. So if tuition goes up a lot, you’re guaranteed to cover that difference.

Uh, but there, that is only at participating colleges or universities, which are all in Massachusetts. Um, so people want to know what happens if my child doesn’t end up going to one of those colleges. If that happens, you have a couple of options. Number one, you can just wait and see if they change their mind and, and go to a college.

And, and that is, uh, participating. Uh, you, you can hold onto these certificates until about six years after they [00:36:00] mature. Um, if. That is not a good option. If there’s another beneficiary in the family, again, that you, uh, can transfer these funds over to, that could use the funds, that’s an option. And if those aren’t options, you can always cash out and get what you put in.

Plus the interest back interest accrues at CPI on these bonds. Uh, and there are no tax penalties for doing that. So you get what you put in plus the interest. Uh, in terms of Commonwealth and Massachusetts taxes, there are no taxes, uh, levied on that. Federally as well. Um, what happens if my beneficiary goes to graduate school, if you have funds left over, this is only for undergraduate degrees.

Um, but again, you can cash out and get what you put in plus the interest back at that point and, uh, without tax penalties. So again, that is sort of the benefit of this program. You get to lock in that percentage, uh, and, and it grows as the tuition grows. And if you can’t use it in that way, it’s usually worth more that way.

Uh, although not always, uh, if inflation, for [00:37:00] example, has been really high, you know, it might be worth more cashed out. Um, but you know, if you can’t use it in that way, you can always cash out and get what you put into put into it plus the interest back. So this is a list of the participating colleges and universities and the plan, and I’ll, I’ll just leave this here for, for a minute.

Um, and, uh, you can see there’s a good listing of, uh. Public and private colleges available. There’s a couple of other tax benefits that are associated. I, somebody asked about this. So, uh, even though you put in post tax money, there are tax deductions that you can claim at the state level for contributions to the U Plan, U plan and the you fund.

So, uh, savers can claim up to $2,000 of their contributions if they’re married, filers filing jointly, or $1,000 for individual filers. Um. Of, of their contributions on their state taxes to either one of [00:38:00] these plans. And these limits are per filer, not per account. And again, according to that study that the 2024 CSI study from Fidelity, 66 of percent of respondents said they would be more likely to save if Massachusetts offered a tax deduction.

So we do actually offer that. The state does offer that. So, uh, again, just another sort of incentive for people to say, okay, got a couple of more questions. Check these out.

Mm-hmm.

Yeah. So if, if you, uh, if you’ve set up an ugma Upma account and you want to change that, um. I, I, I don’t know. I mean, that’s a tricky question. I, that’s a fidelity question, I think. Um, yeah. So [00:39:00] that, that, that’s something that I would ask. ’cause I think there might be different long, different guidelines on that from, uh, from, uh, different states.

But, um, uh, so I would check with Fidelity on that. Um,

I don’t know. Yeah, I’m not sure. Um, so I, I, I, I think I’m, I, I, I, I’m, we can talk maybe afterwards, um, but because I do have thoughts, but I don’t wanna. Have them right now. Exactly. Um, so the safest year to open a u plan account will be sixth or seventh grade, or do you advise to open earlier than that? Yeah, earlier is certainly, uh, the earlier the better in general.

So, um, yeah, you can open earlier than that. I just, you’re eligible, you’re able to put funds in for the students’ freshman year and entire education then up until about the, um, freshman year in high school or so. So anytime before that is good. But thank you for these [00:40:00] questions. Um, so strategies for savings.

So how do we know that people save and have success saving? Um, starting to save as early as possible. We just said the earlier, the better. Using times your advantage. Uh, fidelity, uh, uh, 5 29 funds have compounding interest, which we’ll see in a second. Uh, and of course, you know, the earlier you can lock in a tuition increase for, uh, a tuition percentage.

Uh, um, it, this. The more, the increase that that will cover, starting with a goal in mind, is a good, uh, idea. Um, you know, there’s, I would just say starting is a good idea. I mean, don’t let any uncertainty about what the goal should be, delay you. Uh, but there are some ways that you can actually. Have a goal in mind and not have it be the entire cost of a four year education at the most expensive type of college.

We’ll see which way, we’ll see what I’m talking about. There’s a tool that we offer that can help you do that. Taking advantage of unexpected funds, whether that’s income tax, uh, [00:41:00] refunds, or, uh, unexpected windfalls in one way or another. Save all or some of that, uh, in a college savings account. Using automatic transfers is, is huge.

I mean, I always tell this story that when we opened up. 5 29 account for my son. Uh, he was, it was about at birth, ’cause I worked for Eva obviously, so I gotta do that. Um, but uh, and when he was about 10 months or so, I remember saying to my wife, well, we gotta start, you know, putting money into his U fund.

And she told me that we had been doing that ever since he was born. Um, it was coming out automatically from my, uh, account and I just. I never saw it, so I didn’t know we were doing that. Uh, and that’s the benefit of, of course, using automatic transfers, getting the word out and asking family and friends to contribute.

That’s, that’s a huge one, especially these days. That image that you see on the right there is a gifting page that Fidelity, uh, set up for, um, or allows people to set up for their youth fund. You can customize your page, put a picture of your child, the eight, the, the year that [00:42:00] they’re anticipating going to college, um, you know, what they wanna be when they grow up, et cetera, all that stuff.

And then you can take a link to that page and just email that link out to family and friends and people can gift directly in, um, to that page and involving your child in the process. Right. So, um. I, I, I remember the, the example I always use, um, is that, uh, of a financial aid worker, uh, in Massachusetts, I was doing this presentation and she said, oh, yeah, and I, I made my, my daughter save half of everything she got.

If she got for money for birthdays, first commun, whatever it was, you know, you get money, put half of it in your college savings account. So not only did that help to grow the account, but it also became a lifelong saving habit that she, she did, she really saved half of everything she got. Um, and you know, kids like to see their balance going up and like to see that they have a thousand dollars or $5,000 or whatever it might be.

That’s exciting. And we [00:43:00] know, again, that just the child knowing that money is set aside for him or her increases their college going rates and graduation rates as well. Um. Uh, this is our savings calculator. You can go on MEFA.org where you can sort of get a feel for how much money you’re on track to save.

Uh, as you see, you can put in your initial deposit, the age of the child, your monthly investment, and based on a certain percentage, uh, of return. Uh, it’ll calculate how much money you have put in and how much interest accrues on that, and the total that you have, uh, or, you know, you’re, you’re, um, estimated to have by the time the child turns 18.

Um, MFA’s college planning tool, this is, uh, sort of the tool that I was getting at earlier, um, that, that can help you determine a goal and how help you to sort of, um, evaluate how well you’re doing on your way to your goal. So we used [00:44:00] to get calls all the time from families, especially with, uh, very young children who.

Just had a child and they were like, I want college to be paid for her by the time she gets to college. How much do I need to put in every month? That’s a really hard question to answer, uh, because there’s a lot of things you just don’t know yet, right? You don’t know where the student might be going to college, which is a huge variable.

You don’t know, um, how much financial aid the student may be eligible for. So that’s another big one. So this college planning tool can help people to actually determine how much they should be putting away on a monthly basis. It can do other things too, but that to me is kind of the heart of it. So, um, if a family creates a profile on MEFA college planning tool, they can kind of do what they did on that savings calculator, put in their initial amount that they’re saving, put in a monthly amount or recurring amount that they’re saving, and then they can, um.

Put in their, their earnings, their income, right? And so what that will do when they start adding colleges or college types, [00:45:00] they can actually go and see, okay, based on the rate of tuition increase over the years, by the time your child gets to college, if they go to this college, this is how much tuition is gonna be.

Now you see this at the bottom here, uh, on this image on the right. So cost at this particular college, 59,995, since you put in your income, we’ll know how much financial aid well not know. We’ll have an estimate of how much financial aid you may be eligible for gift aid. That’s scholarships and grants, so not loans.

So we know that they’re eligible for 7,000, or we’re gonna guess that they’re eligible for $7,073. And by the time they get there. They’re scheduled to have about $32,000 saved. So that means that leaves ’em with a shortfall of about $20,000 for the first year, almost 21,000. Um, so based on this, you know, you can either start adding some less expensive colleges.

You can start increasing your savings. You can apply for outside scholarships. But this [00:46:00] is, uh, and this is, these are things that you can do, you know, you can apply through outside scholarships, um, through the, the college planning tool as well. Um, so it will allow you to again, record your current savings project, your future savings and future expenses, and your estimated financial aid, and receive guidance on how you can pay that shortfall balance.

So, uh, according to that 2024 CSI study, 89% of respondents still believe that the value of a college of education is worth the cost. So. Taking advantage of compound interest. I mentioned this in conjunction with five 20 nines. Five 20 nines offer compound interest, which is essentially interest gaining on interest.

So we have an example here of Julie starting to save $50, uh, per month in a 5 29 account when her child is first born. And Jonathan starts [00:47:00] saving a hundred dollars per month in a 5 29 account beginning when my child is in the second grade. So that assessing the benefit of starting early, right? Uh, who will have more money saved when his or her child turns 18.

And we can see it’s Julie, even though she’s putting in half the amount since she started earlier. Um. She’s gonna have 21,000 projected to have at a 7% return, uh, $21,536 saved by the time her child is ready to go to college. 10,800 of which she contributed, and almost the same amount, 10,000 7 36 of interest.

So she put in 10,000, essentially 10,800 and earned almost that exact amount back. So of that 21,536, only about half of that is her contributions. Whereas I will have about 19,000 7 98. That didn’t do too bad. Um, but of [00:48:00] that 13,200 will be my contributions earning about seven, 6,000, $600 or so of interest, just to give you the idea of how powerful that value is of having time.

Right? It’s like retirement. The earlier you start, the better. Although as I said, it’s done, I would never say it’s too late.

Here’s one other thing I would like to mention too. This is the gift of college gift cards that we have. So if you wanna make a gift of college savings, you can do that. You can buy, uh, a card at, uh, locations throughout Massachusetts, or available in Don denominations, excuse me, of 25 to $200 at CVS Cumberland Farms and stop and shop, uh, stores across Massachusetts.

So if you want to go somewhere with a gift for a child, uh, you can pick up one of those. You can also have, uh, you can also do an in, uh, uh, a virtual gift card from efa.org. Um. And, and give that gift that way. Uh, [00:49:00] these can be used for you, fund you plan and attainable programs attainable as our 5 29 A. And it’s for, uh, it’s a similar program to 5 29.

It works a similar way except instead of for college specifically, it’s for individuals with, uh, disabilities and, and related expenses that could include college and could include a lot of other things. Um, it can also be used to, um, pay student loans as well. Okay. So how family, we’re gonna close with how families, uh, actually pay for, uh, post-secondary education.

Now, um, as I mentioned, this is always on people’s mind. How do people pay for college? And the first thing I wanna mention is that when you say college, there’s lots of different types of colleges. I know it’s very common to say it costs $60,000 to go to college, $70,000 to go to college, a hundred thousand.

We just had the first $100,000 cost yearly cost in Massachusetts, um, earlier this year. But there’s a couple of different things to understand about that, that those [00:50:00] big prices that you hear about are often the most expensive ones, right? Because it’s a new high for colleges to have reached. And they also refer.

Uh, primarily to four year private colleges, of which there are a lot in Massachusetts and New England and Northeast in general. Um, but there are lots of different types of colleges, right? And four year private colleges are often the most expensive. I’m gonna give you the average national costs of all of these different types of programs.

And this is, uh, compiled through, um, the college board, the, the organization that does the SAT, um, and the CSS profile applications. They also do a lot of educational research, and this is from a, a publication called Trends and College Pricings. So these are national averages. So, um, in the New England area in Massachusetts.

Our prices are gonna be a little higher than the national prices, especially for four year private colleges. But the average annual price for a four year private college [00:51:00] is $65,470. Uh, that includes not just tuition of fees, but food, housing, supplies, transportation, and other expenses at the overall cost of attendance.

Now, based on your student and whether or not they live on campus, for example, or, you know, all sorts of variables, they may or may not be paying all of those expenses. So there’s some elasticity there to that number. So that’s something you should be aware of. But generally speaking, all things considered, you know, if they’re paying for everything, the average annual cost for a four year private college is $65,470.

But there are public colleges as well, right? So if you go to a public college in the state that you reside in, you’re going to pay a discounted tuition if you go to a public college or university. Outside of the state that you reside in, you’re not going to get that discounted tuition, so it’s gonna be more expensive.

But those, even in the, both of those cases, they’re still less expensive than the four year private. So [00:52:00] 30,990 is the average annual, uh, cost for an in-state student at a four year public college, uh, in, uh, or university and 50,920 for an out of state, uh, resident to go to a public college or university.

So, um, and, you know, Massachusetts maybe closer to the national average here, but, uh, already you can see there’s a big discrepancy between 30,060 5,000 Now. This vocational school. Of course, there are other types of education other than college. So vocational training programs, there’s a lot of variability here.

So it, it’s difficult to say what the average, uh, annual pricing for these colleges is. This is not from the, uh, same publication. This is from Best Colleges. Uh, how much does trade school cost? And so that trade school can cost up to 15,000 or so. This is the average annual price, uh, for tuition only for the entire education.

So, [00:53:00] um, this is, again, very difficult to say because there’s a lot of variance in, in programs and in fact a lot of vocational programming, um, education programming is done through the two year public community colleges, which are the least expensive yearly options. So it says here, 21,320 per year. That is high.

That seems high to me because that also includes, um. Food and housing for these two year public community colleges. But in Massachusetts, all the community colleges are commuter colleges, so they don’t have food and housing costs. So it’s about half of that. Uh, so think around $10,000. And actually in Massachusetts, um, there is a free community college program that, that most students are able to, to take advantage of.

Uh, so again, the big things to take away from this, lots of different types of colleges, um, with different costs, right? So anywhere from about $10,000 a year to [00:54:00] $65,000 a year. And this is sticker price. So this is before financial aid. That’s the other big point that I wanted to mention. Most families won’t be paying the full sticker price.

Most families will be eligible for some level of financial aid. And so, um. You know, these sticker prices are not necessarily the, the targets that you should have in mind when you’re making your, uh, savings plans. As I mentioned before, there are two ways to, to award financial aid, merit based. So that’s student achievement.

Think academic scholarships, athletic scholarships, et cetera. That’s often given by the colleges, and that will vary a significant amount from college to college. What they do, most financial aid is need based. So it is, uh, determined on your financial eligibility, your financial need, and that is determined when you’re filing your financial aid forms.

But just to give you an idea is that is a, uh, pretty, you know. Well understood idea that college can be very expensive. It is not as well understood how much financial aid there is granted in a year. And the [00:55:00] most recent numbers that we have for the amount of financial aid that was granted in a year is the 2024.

2025 year $205 billion was granted, uh, in financial aid. And so that’s a lot of money. And so that should be understood. So once families do have a financial aid offer from a college and they have a balance due, how do they pay for college once financial aid is taken care of? There’s only three ways that you can use past income, meaning any savings that you might have.

So this is where you’re, you fund or you plan or whatever way you’ve chosen to save, comes into play present income, which is the salary that, you know, the parents or the student is earning while they’re in college. And so people can get on monthly payment plans and, and make sort of monthly payment plans against tuition.

Even if you can’t save, if you can’t pay the entire tuition that way, most people can’t. Uh, it is worth it to pay what you can. So if you maximize your financial aid, your savings, and your present income, uh, [00:56:00] the, the only thing that’s left is future income or loans, right? And so, um. Most, well know, most many, if not most people will have to borrow something to get through two or four years of college.

Um, that’s not necessarily a problem. The problem of course, is when people over borrow, they, they borrow more than they need to or more than they can, uh, comfortably pay back. So you wanna maximize everything before you get to borrowing. Um, and, you know, parents should be aware that we talk about student loans a lot.

So most, a lot of people think that, you know, students can just sort of, um, borrow whatever amount they might need to pay for college as long as they promise to pay it back after. And. That’s typically not the case. I mean, students can borrow what they, uh, can borrow a certain amount in their own name through the federal loan program, but there are loan limits associated with that 5,500 freshman year, up to 7,500 senior year.

[00:57:00] Uh, and that’s part of the financial aid offer. So once they accept that, that’s, you know, they, they can’t go back to that program to borrow for, for a balance. Um, any loans that people get on top of that, like from a, a private bank or even the federal government, uh, or an organization like Mefa, has to be approved on the basis of credit or credit and income.

And most students can’t be approved on that basis ’cause they don’t have the credit criteria necessary. Um, but, um, you know, the, so, so they need a parent or someone else to be a co-applicant and so, um, a co-applicant is equally responsible. To repay with a student. So that monthly payment amount for the first year, second year, third year, fourth year, is going to be important.

How much you’re borrowing and paying back on a monthly basis, not just to the student, but to any parents or anybody else on the loan as well. So just be aware of that. So [00:58:00] next steps when it comes to saving, if you haven’t started to save yet, start, it’s the best thing that you can do. Um, if you are saving, continue to save.

See if you can save a little bit more. Uh, that’s a good thing to do is just sort of check in periodically and see if you’re saving as much as you can. Save, you know, have you had a raise since then? And not sort of increased your saving? Take a look at it. Talk to your child about college. You know, talk to them about what they might wanna do.

Where they might wanna study, uh, what programs take, show them around a college campus just to see what it looks like, uh, get them thinking about it, using online tools that we went over in this presentation or others to, to learn more about colleges is, is a good step as well. You can take a look at other webinars that we have offered, and you can join our email community if you want to register for upcoming Mefa Institute webinars and complete lessons to earn PDPs.

You can do that. Um, and if you want to share mefa resources with your families, there’s the QR code to do that as [00:59:00] well. Here’s our, um, social media information, Facebook, Instagram X, LinkedIn, YouTube, and our MEFA podcast, which I’ll plug because I, I, uh, host it. Um, and any questions that you have that I didn’t get to, uh, there’s our info.

You’ll have my, um. You know, uh, email and, and, and whatnot from when I send you the presentation. So please don’t, uh, hesitate to, to reach out if you do have questions. Um, other than that, oh, is someone saying if that tool was available for people who don’t live in Massachusetts, that the college plain tool?

Yes, absolutely. Yeah. Anyone can use that. There, there, there’s no Massachusetts requirement really for any of this.

Okay. So something that own, is it smarter for a grandparent or non or non-parent to start the account for the purpose of the fafsa? Can students have multiple 5 29 accounts? Yes. So that’s a good [01:00:00] question. So is it smarter? Is, is, is one question. I can’t answer that because whoever is in is the owner of the account will be in control of that account.

In terms of the fafsa, it will not be viewed as a parent asset, so it will completely skirt the financial aid process. So it would work out better for you that way in terms of financial aid, if you did do that for the fafsa. Uh, although I will hasten to add again once that, that parent assets in terms of FAFSA really don’t come all that much.

So it’s really, you know, the, I, I think there’s a limit to how much work you really need to do to, um. To, to move things around so that they don’t see it in that way because again, it’s a pretty small percentage that they’re looking at it. But yes, technically speaking, it’ll, it’ll be bypassed in terms of financial aid if a non-parent opens it for, for the fafsa.

Um, and then what was the second question? Oh, can a student have multiple 500 nines? Yes. And that’s why I said the combined account maximum for the U fund, for example, can’t exceed 500,000. So if I have a U fund for my son [01:01:00] and my mother has a U fund for my son, that those two accounts together couldn’t exceed 500,000.

But, but you can have, a student can have multiple five 20 nines in their name from different owners. Yes.

All right. Well, um, I think if that’s it, I will, um, end the webinar and thank you for your attention and if you have any questions, please let us know.