Not just for pricey 4-year schools, 529 savings plans good for STCC students too

By LAURIE LOISEL

SPRINGFIELD, Mass. – When Springfield Technical Community College transfer counselor Maria Zayas-Bonilla was a college student, she’d never heard of the FAFSA, let alone 529 plans or any other financial aid lingo.

Like many first-generation college students, she just worked harder to support herself and scrape together money to cover tuition and other expenses in pursuit of degrees at Holyoke Community College and Westfield State University. Occasionally, she would copy pages from textbooks so as to reduce book expenses to pay other bills like groceries and electricity.

Now she understands there were other ways to fund her education, and she dedicates herself to educating STCC students, many also first-gen college students, about programs that help pay for college.

Covering the cost of a college education, even one known for being more affordable than most, is a daunting prospect for many families, especially those who are low-income or first-generation.

Zayas-Bonilla said it wasn’t until near the end of her own college career that a friend told her about the FAFSA, explaining that by filling it out she might be entitled to financial aid that could make her life easier.

These days, she likes to scoop up STCC students early in their time at the college to preach a bit of financial literacy that she hopes will save them money and improve their educational experiences.

Some 79 percent of STCC students are on some kind of financial aid, according to Jeremy Greenhouse, dean of student financial services at STCC.

Yet very few of them know about the U.Fund 529 college savings accounts, so named for the section (529) of the Internal Revenue Code that authorized them.

Unlike the better-known U.Plan, which essentially locks in a tuition cost by pre-paying it before a student attends, the U.Fund allows families to open “tax-advantaged” (rather than tax-deferred) savings plans that encourage them to save for their children’s post-high school education.

While some people start them when their children are babies, it’s actually never really too late to start a 529 plan. And they are definitely not only for families who are looking to pay for the priciest of college options.

“Most people could benefit,” said Greenhouse. “This could be in place of taking out a loan and it would reduce any out-of-pocket expenses.”

Offered through the Massachusetts Education Financing Authority, known as MEFA, U.Fund 529 plans allow families to save money in an account  that earns interest without being taxed. Withdrawals are also tax free as long as they are used to fund educational expenses.

There is no minimum required to open a U.Fund account, and people can contribute as little as $15 per month or $45 a quarter. In addition, the program allows gift deposits into the account by setting up a gifting page so others can contribute.

The idea is that when people save money to help fund a college education rather than borrow money once they enroll, they enjoy double the savings because they are not only not paying interest on a loan, they are earning interest on a savings plan.

In other words, as explained on the resource-rich and user-friendly MEFA website: “It’s less expensive to save for college than to borrow.”

“Most people could benefit. This could be in place of taking out a loan and it would reduce any out-of-pocket expenses.” Jeremy Greenhouse, Dean, Student Financial Services at STCC

MEFA also offers an incentive known as the Baby Steps Program, which makes a $50 deposit when families of children born or adopted after Jan. 1, 2020, open a college savings plan within one year of birth or adoption.

Greenhouse said very few STCC students have 529 savings plans (he estimates fewer than 10 students) for several reasons, including that the majority of people who start such plans are looking at funding a much more expensive higher education experience. Another factor is that many STCC students are first-gen and low-income, which means they likely don’t know about the plans and also may feel there is no money to spare for a savings plan.

Zayas-Bonilla certainly understands these considerations, but she hopes more STCC families begin seeing them as an option because they are flexible and can make a big difference in a college student’s life.

“These plans, if you put money into them, you can start adding to that pot,” she said. “Even if you can get a few books covered through the program, it’s worth it. College books are extremely expensive.”

The 529 savings plans can help cover tuition, as well as fees, books and living expenses. And they can be used along with other financial aid programs, such as the federal Pell Grant, or the substantial savings realized with the MassTransfer program.

Decisions about how to fund a college education are highly individual. For more information, visit finaid.org or mefa.org, both reputable and information-rich sites.

Interested in applying to STCC? Visit stcc.edu/apply or call Admissions at (413) 755-3333.

About Springfield Technical Community College

STCC, the Commonwealth's only technical community college, continues the pioneering legacy of the Springfield Armory with comprehensive and technical education in manufacturing, STEM, healthcare, business, social services, and the liberal arts. STCC's highly regarded workforce, certificate, degree, and transfer programs are the most affordable in Springfield and provide unequalled opportunity for the vitality of Western Massachusetts. Founded in 1967, the college – a designated Hispanic Serving Institution – seeks to close achievement gaps among students who traditionally face societal barriers. STCC supports students as they transform their lives through intellectual, cultural, and economic engagement while becoming thoughtful, committed and socially responsible graduates.

MEDIA CONTACT:

Jim Danko, jdanko@stcc.edu, (413) 222-9311

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