Stop 2 on the circuit took me to Chicago for the Treasurer’s Conference where I found leaders laser-focused on the future, broadening opportunities, and digging into the details to achieve some lofty goals.
- Treasurer Josh Haeder – South Dakota: Making resources available to families in one place and encouraging them to start saving will lead to kids graduating with less debt.
- Chris Hatcher – Principal (Attorney), Williams & Jensen: Next for 529s could be expansion to certificate programs as a path to success.
- Treasurer Steven Johnson – Kansas: Outreach is very important and leveraging good work in other states benefits everyone.
- Former Treasurer Mary Morris – Virginia: There is a flaw in properly accounting for some who enter and leave community colleges – a vital pathway to success for many.
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John Hupalo: Driving to the airport this morning, I was thinking about Freeman’s book “Crisis in College Finance”. And I realized in the ‘60s, they were solving a different problem. They wanted to provide access to college. Thought leaders today want to provide access to postsecondary educational opportunities. It’s really different. Maybe a certificate program, maybe college, maybe something else, but whatever is right for that high school student.
I’m off to Chicago to see the National Association of State Treasurers College Savings Plan Network, and they’ve been on this for a while. 529s were expanded to allow tax-free growth for over a period of time, but not just for paying for college. Lots of other uses too. Let’s go and see what the college finance pros are saying about this.
I’m so fortunate. I bumped into the Honorable Josh Haeder, Treasurer of South Dakota. Treasurer, you’ve been involved in this organization. You’ve led this organization. What do you think is critical for families to better plan and to pay for college, save for college?
Josh Hader: Yeah, it’s something that’s on my mind. As a young person 30 years ago when I was trying to do this, I had no idea where to go. And I think even today, while there’s so many resources that are out there, young kids that are 17 and 18 years old have no idea where to go. And what’s even more concerning is that parents don’t have any idea where to go. Everything is at 50 different websites. So I think it’s important that we have organizations that are dedicated to talking to young people and giving them the resources in one place so they have a good understanding of where they need to go and what they need as they start to enter college.
John: Well, that’s wonderful, Treasurer. Any other advice you have for families trying to plan and pay for college?
Josh: Start young, I think that’s the most important thing. And if you haven’t started young, it’s never too late to start. So if you didn’t start when your kids were 8 or 9 and now your kids are 13 or 14, you can still use a 529 plan, put some money away for them. It’s less money they have to borrow and pay back as they get out of college and enter their careers. And it’s important that we’re allowing kids to start their career with less debt. I think that allows them to be more successful and a better member of society.
JH: This is really terrific. I just found another great thought leader. And this time it’s with 529 college savings. Chris Hatcher, from Williams and Jensen, had a great presentation where he talked a little bit about what’s next for 529s. Chris, we had an extension of 529s for K-12, Roth IRA conversions, also student loan finance in K-12. What’s next for 529s?
Chris Hatcher: I think as they’ve evolved, 529 plans have sort of gone into different areas as you mentioned. But one of the next ones is a certificate program. There’s legislation in Congress that’s pretty broadly supported, bipartisan, that would let you get a certificate if it’s in a software thing or a trucking certificate, so you can have that job. And it really moves who 529 plans might be worthwhile for to some folks. Not just postsecondary education, not just college education, but someone that is looking to get a life skill that’s going to help them get a career from that. That hasn’t passed the Congress yet, but honestly, it’s probably the next thing that we’re looking to take 529 to and make that an eligible expense.
JH: Well, that’s really absolutely fantastic, because it’s really no longer just about going to college for kids getting out of high school. It’s all the rest of it. This is fantastic.
CH: Everyone’s realized there’s different paths to success in a career and this is one of them. We’re sort of moving that way.
JH: Okay, I told you I’d find a great Treasurer. And here’s the Honorable Stephen Johnson, the Treasurer of Kansas. Treasurer, what do you think is one thing that we need to do to make 529s more accessible, better utilized by families in your state?
Stephen Johnson: A lot of times we focus on how we tweak the plan and make it slightly better. But one of the things we have been focused on is outreach, just to try to educate people better on how to use the plan, how much to put in, roughly what amount of risk they should have. So we added an outreach coordinator to our staff and we’re copying some other states. We’re doing our first Women in Money event just to try to help educate people better about all of the financial issues that they have. And specifically 529s. And then there are some other things that we’re trying to do to just raise the level of financial literacy overall and hope that people can use those plans.
JH: Treasurer, that’s absolutely fantastic. I think this idea of collaboration among the states is just terrific. Can you amplify that a little for us?
SJ: So I first heard about it from Utah and Idaho who had done Women in Money programs. They’ve done a great job. They’ve reached a lot of people. Nevada did one recently, so we watched what they did. And it’s been a great way just to learn how do they put it together and make that work. It is a lot of work to put one together and pull off a day-long event or two-day event. But I’m looking forward to the results that we get.
JH: Well, I found another great leader we’ve talked to before, Mary Morris, the leader of the Virginia 529 program, but also a former state treasurer. And we got to talking about some of the detail. And Mary was talking to me about completion rates, because we talk a lot about completion rates and how important that is. Mary, share some of that insight that you gave about the definition of completion rates and why it might actually be a little misleading.
Mary Morris: I was at a board meeting involving community colleges, a foundation for community college education in Virginia. And we heard from some folks at the Richmond Fed who were doing a lot of research around community colleges, community college education, and those completion rates. And one of the interesting things – my takeaway – was IPEDS, which does most of that work, it’s just how they look at things. So, for example, someone who goes into a community college intending to transfer, they only come off as successful in completing if they get their Associate’s Degree. If they transfer to a four-year university after one year of community college, they’re considered a failure basically in the community college count. They didn’t complete. And they don’t get counted when they get their four-year degree from the four-year university because that wasn’t their first entry into higher education. So those students are just being lost. And I don’t know the exact magnitude, I can’t remember it, but it’s things like that and how you look at it.
Another interesting number I do remember was that about 35% of community college students are part-time, so they don’t get caught in it because IPEDS only looks at full-time equivalent students. A lot of folks in community colleges are part-time. And then the other piece that I feel over the last several years, particularly coming out of COVID, with the community colleges – if you can tell I’m a huge community college booster – I think they just are the economic drivers in most states because they’re just the backbone. They’re providing a lot of transfers to the four-year schools and the credentials and certificate programs that have really become in many states the backbone of what the community colleges are doing.
And so even after COVID, you saw a reduction in many states in enrollment in community colleges in general for those two-year degree programs. They saw a huge increase, 50+ percent, in those who were getting certificates and credentials. And then when you match that up with the fact that for many jobs right now they don’t need a four-year degree, but they need skilled workers. Employers are saying we have skilled jobs that are available and we can’t fill them because there aren’t enough people that have those skills. So the matching that the community colleges can do is to take a shorter term credential. It might be a nine-week program. I think it’s like 9 weeks to get a commercial driver’s license. And there is a constant need for people with commercial driver’s licenses. It’s kind of amazing to me what a great need there is for that.
But there are all other kinds of them. There are single semester credentials. And it’s also the way that you can start stacking things. So you get a credential in a semester. You can then the next semester take something else and maybe you get a second credential. So when you finish a semester, you’ve got something of value that you can really say, “Here are my skill sets. Here’s what I can do”. So there’s just a lot of ways of looking at education. And it’s all about pathways and stacking your skills to meet the needs of our employers and the economy. And provide opportunities for students of all ages.
JH: Yeah, you’ve been a champion of not just 529s for college and have helped expand the utilization of 529s and this is just another extension of that great work.