Recent controversy over one state’s use of the funds in its college savings plans has raised new concerns for parents and students across the country with money in 529 plans.
In a game of fiscal hot potato, the Nevada legislature re-allocated money from a state scholarship fund to the state’s budget gap last year; the state later took $4.2 million worth of accumulated fees from 529 plan reserves to cover the shortfall in the scholarship fund, according to a recent report from the Nevada Policy Research Institute, a conservative think tank. The plans’ overseers had other intentions — traditionally, those monies have been used to support the plans — and critics now say the result could be higher fees and a weaker prepaid tuition plan.