Asset Building Financial Inclusion Report

Reforming 529 College Savings Plans to Better Reach Low-Income Families

Qualified Tuition Plans, commonly called “529 plans” after the applicable section of the federal tax code, were implemented in their present form in 2001. These state-sponsored plans can help families save for their children’s college education, or an adult can open an account to use for their own post-secondary expenses. Generous contributions can be made to these accounts—up to $300,000 in some states—and anyone can open an account regardless of income. Currently, up to $267,580 can be withdrawn free of federal taxation. Some states have reached out to low-income families through the design of their 529 plans. Inclusive features such as targeted outreach, no or low enrollment fees, low minimum initial and subsequent contributions, automated features like direct deposit and payroll deduction, affordable management fees, and an “age adjusted” investment option are a few examples.

Project: College Success


Clancy, M., & Parrish, L. (2006). Reforming 529 College Savings Plans to better reach low-income families (CSD Report No. 06-32). St. Louis, MO: Washington University, Center for Social Development.