About this Initiative

The College Savings Initiative was launched in 2009 as a joint venture of the Asset Building and Education Policy Programs of the New America Foundation and the Center for Social Development (CSD) at Washington University in St. Louis, funded by the Lumina Foundation for Education and the Bill & Melinda Gates Foundation. The Initiative is centered on helping Americans of all income levels save and prepare for college through innovative reforms to 529 college savings plans at the state and national levels. The initiative seeks to achieve this through study and promotion of existing inclusive innovations in state-based 529 plans; modernization of existing federal college aid programs, including federal income tax-based aid programs; policy research and design; communications; and policymaker education. Ultimately, the Initiative aims to increase post-secondary education access and completion rates among lower-income, disadvantaged students through innovative public policy and other reforms to 529 college savings plans.

About 529 Plans
In 2001, the Internal Revenue Code authorized college savings plans (529 plans) as a tax-advantaged savings tool. In a 529 plan, individuals save money in an account that is dedicated for future college expenses of a beneficiary. States administer 529 plans, and offer a limited selection of funds with a range of risk and return characteristics. In addition, contributions are tax deductible in many states for state-resident contributions to 529 plans. The account owner chooses a beneficiary, who can be changed at the owner’s discretion. The account may be used at any eligible educational institution, including public and private colleges and universities, graduate and post-graduate schools, community colleges, and certain proprietary and vocational schools.

Although current participation in 529 plans is primarily among mid-to-high-income families, the 529 savings platform lends itself to a more inclusive saving policy. It is the characteristics of 529s -- especially public oversight, centralized accounting, low deposit minimums, and matching provisions -- that can become building blocks for more inclusive policy.