Editor’s Perspective on 529 Plans: “The Morning Pulse” Podcast with Jeffrey Snyder and George Grombacher

By | | July 19, 2018

What are the top trends and topics in the 529 college savings plan industry?

Introduction: This week’s 529 Insider provides a podcast transcript between Paul Curley of Strategic Insight and Jeffrey Snyder and George Grombacher of “The Morning Pulse” Podcast released on July 15, 2018. The Morning Pulse was founded in 2012 as a digital technology, media company and consulting firm focused on the retirement and financial services industry, and the podcast audience has grown to over 100,000 industry professionals. The podcast typically covers issues and topics relating to retirement. Part 1 of this transcript covers questions and responses relating to 529 College savings plans, while part 2 covers questions and responses relating to ABLE accounts. The transcript provides an edited version to improve readability and understandability, and keeps the initial context and intent of the flow of conversation intact. To listen to a recording of the podcast, click on the link at the bottom of this article. In the meantime, thank you Jeffrey Snyder and George Grombacher for your time, insight and support in the podcast and for helping to raise awareness and understanding of 529 plans and ABLE accounts. Also, thank you readers as I hope the article provides you with an opportunity to learn more from your peers.

Question (Jeffrey Snyder & George Grombacher): Shifting into our next segment, we’re very privileged George to be joined by Mr. Paul Curley. He’s a CFA charterholder and Director of Research with Strategic Insight and he really focuses on 529 college savings plans. Paul great to talk with you. Thanks for joining us on the show today.

Answer (Paul Curley, CFA): Thank you so much for your time. Happy to help.

Question: We enjoy talking about retirement, and saving and college, and college planning is a big part of that. I know you’re prepping for a conference, and I’ve been seeing some of your email blasts, and LinkedIn and social media posts, but what’s going on in the world of college savings. I mean there’s probably so much, and I know we only have ten minutes, but can you encapsulate for the audience some of the top issues?

Answer: That right there is a great question as there’s a bunch of different kind of issues and trends going on. Obviously we’ve seen the rampant growth in student loan debt and how that’s really impacting the many different aspects of life. Whether it is being able to save or being able to purchase a home. Within the student loan debt issue, that is impacting retirement on the employee side. For employees, we are currently at a point where they really see value in employers that are willing to help them out with college financial planning employer benefits whether that be student loan debt repayment or just matching things on the 529 side. From the employer perspective, there is value in attracting and retaining employees. For financial advisors, in my discussions with them, they really see value in the ability to engage the employer and the retail channel with the corporate college financial planning benefit. From there, there is the homeschooling bill introduced by Senator Cruz. There is the Prosper Act that would take the 529 impact out of FAFSA. Apprenticeship is on the go and tax reform is there too, and so there is no shortage of topics to focus on. But I am here to help you in anyway. The real goal is really just to raise awareness of the need for college financial planning and to really help more people to save and save efficiently to avoid that student loan debt.

Question: Yeah, that’s certainly music to my ears. And Paul, I don’t know if it’s possible or not – Do you have a sense of what the trends have been in terms of money flowing into 529 plans as of late over the past couple years?

Answer: Yes, 529s have been growing, stable and increasing. The growth in contributions have also been increasing. Also, distributions have been increasing which is a good sign because 529s are being used successfully. What we have seen is that at the tail end of last year there was the expansion of qualified 529 expenses from primarily college undergrad and grad school to also include private K through 12 as well (at the Federal tax level). Since then, we only have one quarterly data point and one data point is not trend, but we are following flows very closely to see if there is impact on more money coming in and the potential growth in distributions as well due to that expanded usage of 529s.

Question: Paul – I’m not sure if you mentioned this or not, but I think that it makes all sense in the world to start making 529 plans available as an employee benefit because I think the take-up rates would be very very very good. How are they being deployed most commonly? Is it through benefit brokers? Is it financial advisors?

Answer: Within the corporate channel, it’s either the direct-sold or adviser-sold. Corporate activity accounts for roughly 5% of assets and gross contributions. Currently within the 529 marketplace, corporations do not use 529s enough. There is currently an HR 529 bill that includes two different pieces that are 529 employer channel related. And there is also the Options Act which will relate to expanding 529 qualified distributions to apprenticeship programs. But low and behold, I think you are right. To those that are listening that are plansponsors and plan advisers, there are a lot of opportunity to add college financial planning benefits to benefits packages, even if it’s just something as simple as providing automatically deductions.

Question: Yeah, absolutely. I mean I think this goes back to earlier conversations that we’ve had in other shows is that these benefits are not independent of one another and they can work together. Whether it’s health care, whether it’s the retirement benefits, whether it’s some type of insurance, people need to see or employers can see these benefits across the board and how they can work together to provide employees with a satisfactory experience in terms of preparing themselves and their family for basically all of life’s events.

Answer: Absolutely. College, retirement and health care. All of them are goal-based investing, and they all help families to save and save efficiently.

Question: Well great. Paul thank you so much for joining us today and we look forward to catching up with you down the road later in the year to see how 529s are doing and what the latest news is on 529 plans. Enjoy the rest of your summer. Thanks Paul.

Answer: Thank you.

Question: That was Paul Curley from Strategic Insight giving us a lot of great data and information on the state of 529 plans.

Editor’s Call to Action: Podcasts provide a great forum and channel for on-going education, and especially during the daily commute or exercise routine. Listen to the live Youtube version of the show at https://youtu.be/oMtgbFHmQmo. Alternatively, the recording of the show is also available on podbean at https://weeklypulse.podbean.com/, as well as Itunes, GooglePlay and Stitcher. Last but not least, please visit The Morning Pulse to learn more about the podcasts and their daily e-newsletter. Thank you Jeffrey and George for the opportunity and your time and insight, and thank you readers for learning about college financial planning from your peers. Hope you create a great day.