State 529 College Savings Plans Offering Free Money, Matching Grants, and Promotional Incentives

State-sponsored 529 college savings plans are increasingly deploying promotional incentives, including free deposits, matching grants, and prize drawings, to encourage families to begin saving for higher education. These initiatives, often timed around the annual National College Savings Day on May 29, aim to raise public awareness and participation in tax-advantaged education savings accounts. While 529 plans are available in all states except Wyoming and the District of Columbia, specific promotional offers and grant programs vary significantly by location and eligibility criteria.

The core structure of a 529 plan involves state-sponsored investment accounts that allow contributions to grow tax-deferred. Withdrawals remain tax-free provided they are used for qualified education expenses, such as tuition, fees, books, room and board, and equipment. Despite the significant tax advantages and the fact that total assets in these plans reached $319 billion in 2017, public awareness remains relatively low. A survey conducted by Edward Jones found that fewer than one-third of Americans could correctly identify a 529 plan as an education savings tool. In response, states and industry groups utilize annual publicity campaigns and financial incentives to drive engagement.

Promotional Incentives and Free Money Offers

Many states utilize short-term promotional offers to attract new account holders, particularly around the May 29 "529 Day" observance. These promotions range from matching contributions to direct cash deposits and prize giveaways.

National 529 Day Promotions

Several states have announced specific promotions for the 2024 and 2025 National College Savings Day periods: * Alabama: The CollegeCounts 529 Plan is holding a "529 Baby Day Giveaway" for its 10th year. The promotion awards 29 contributions of $529 to newborn babies born between May 29, 2023, and May 29, 2024. * Alaska: Alaska 529 is hosting a social media contest on Facebook and Instagram. Participants are asked to "spell out" 529 using everyday objects, post a photo, and tag the plan. One winner will receive a $1,529 scholarship, drawn on Facebook Live. * California: The ScholarShare 529 plan offers a $50 match or bonus for families who open a new account between May 20 and May 31 (dates apply to both 2024 and 2025). To qualify, families must deposit at least $50 and set up recurring monthly contributions of $50 or more for six consecutive months. The 2025 iteration requires the promo code "529Day25." * Georgia: The Path2College plan will donate $1,529 to two babies born on May 29. * Nebraska: The Nest 529 plan offers $100 bonuses for new accounts opened by the end of May. * North Carolina: The NC 529 plan holds a drawing for a $1,529 deposit into a winner’s account. * Tennessee: The state offers $25 matching gifts for new accounts opened during the promotional month. Additionally, participants have the chance to win four tickets to local attractions, such as the Tennessee Aquarium.

Other State-Specific Incentives

Beyond the May 29 events, other states offer unique freebies and matches: * Colorado: Through the CollegeInvest Matching Grant Program, account owners can receive up to $500 in matching funds annually for up to five awards. * Connecticut: The CHET Baby Scholars program automatically provides $100 to a new account when a baby (less than one year old) or a recently adopted child (under one year since adoption) has an account opened. * Nevada: The Silver State Matching Grant Program matches contributions up to $300 per year, with a lifetime maximum of $1,500 over five years for the same beneficiary. * Tennessee: In addition to the $25 match, Tennessee’s Investments Preparing Scholarships Program (TIPS) provides $100 for every $25 contributed, with a maximum of $500 per year for up to three years. * Wisconsin: The Edvest 529 plan offers a free webinar on May 29 covering the benefits and mechanics of 529 plans.

Targeted Programs for Low-Income Families and Milestone-Based Grants

While 529 plans are available to families of all income levels, specific grant programs are designed to assist low-to-moderate income families in starting college savings. Research indicates that children with even a small amount of college savings are significantly more likely to enroll in and graduate from college. Specifically, students from families earning below $50,000 who have between $1 and $499 saved for college are more than four times more likely to attend college than their peers with no savings.

State Matching Grant Programs

Approximately 12 states provide savings matches specifically to encourage participation among low-income families. * Louisiana: The Louisiana START Saving Program is managed by the Louisiana Office of Student Financial Assistance. This integration allows the state to combine college savings outreach with financial aid information for low-income families. * Virginia: The Virginia529 plan partners with nonprofit organizations to contribute funds to low-income high school students as they achieve college preparatory milestones. Students can earn up to $2,000 by maintaining a 2.5 GPA, minimizing school absences, engaging in community service, and completing the FAFSA (Free Application for Federal Student Aid).

K.I.D.S. Matching Grant Program

A specific program mentioned is the K.I.D.S. Matching Grant Program. This program matches up to the first $600 of a contribution, provided a minimum contribution of $100 is made. The source data does not specify which state or plan administers this specific grant, nor the income restrictions associated with it.

The Mechanics and Impact of 529 Plans

The fundamental appeal of 529 plans lies in their tax advantages. Established by Congress in 1996, the plans saw significant growth after 2001 when tax-free withdrawals were enacted. The accounts function similarly to a 401(k) but are designated for education expenses. Balances in these accounts have reached record levels, with total assets rising to $319 billion in 2017—a 16% increase over the prior year. The number of accounts grew by 3% in the same year, with the average account balance reaching $24,000.

Despite these figures, the Edward Jones survey highlights a persistent gap in public knowledge regarding these plans. This lack of awareness drives the annual spring publicity campaigns and the utilization of "freebies" to attract attention. By offering immediate financial incentives such as $50 matches or $1,529 drawings, states hope to overcome the inertia of potential savers and demonstrate the accessibility of the plans.

It is noted that "adviser sold" 529 plans, such as those offered by Edward Jones, include professional advice but also come with extra sales fees or commissions. This distinguishes them from direct-sold plans, like Wisconsin's Edvest 529, which consumers manage themselves.

Resources for Consumers

For families seeking detailed information on specific state offers, the College Savings Plans Network provides an online map with links to details for offers in each state. Additionally, the website www.savingforcollege.com is cited as a good resource for additional details regarding the plans.

The College Savings Foundation (CSF) also highlights the benefits of 529 plans, noting that they are designed to reduce the need for student loans. CSF organizes promotions and highlights member activities for National 529 Day.

Conclusion

State 529 college savings plans utilize a variety of promotional strategies, including free money, matching grants, and prizes, to encourage families to save for higher education. These incentives are particularly prominent around the annual May 29 National College Savings Day. While plans are widely available across the United States, specific offers, eligibility requirements (such as age limits for "Baby Scholars" programs or income restrictions for matching grants), and contribution matches vary by state. The primary goal of these programs is to increase participation and awareness, leveraging research that suggests even small college savings significantly improve a child's likelihood of attending college.