Columbus, OH – October 2, 2019 – For 30 years, CollegeAdvantage has helped families in Ohio and across the country save for college. “We advocate Ohio’s 529 Plan as an alternative to student loan debt. For 30 years, Ohio has offered this viable alternative and has proven to be a trusted, enduring partner to thousands. Families recognized the economic threat of student loan debt and the merits of saving and investing in Ohio’s 529 Plan for education expenses after high school,” said Executive Director Tim Gorrell.
With the passage of House Bill 61 in 1989, the Ohio General Assembly created the Ohio Tuition Trust Authority (OTTA) to help families save and plan for their children’s future higher education. During the first ten years, OTTA offered the Ohio Prepaid Tuition Program, now known as the CollegeAdvantage Guaranteed 529 Savings Plan. This was a unit-based prepaid plan backed by the full faith and credit of the state of Ohio. In 1996, the Internal Revenue Code Section 529 was created and authorized tax exemptions for state and tax deferrals for participants who contributed to a state’s 529 program.
In June 2000, Senate Bill 161 was signed into law and OTTA launched CollegeAdvantage with two new variable 529 savings plans, the Direct and Advisor Plans with Putnam Investments. As part of the passage of S.B. 161, a state tax deduction also took effect, allowing contributors to CollegeAdvantage to deduct up to $2,000 per year, per beneficiary, from their state of Ohio income taxes with unlimited carry forward in future years for annual contributions over $2,000. In 2001, the federal government temporarily authorized that qualified 529 plan withdrawals would be exempt from federal income tax. This exemption became permanent in 2006.
With the rising cost of college tuition within the state and investment pressures in the markets, the Guaranteed Savings Plan was closed permanently on Dec. 31, 2003, to new contributions and new accounts. The agency continues to service these existing accounts to pay higher education expenses for the original beneficiaries.
OTTA continued to expand and enhance its Direct Plan in 2004 with the addition of 15 new indexed options managed by The Vanguard Group. In 2005, FDIC-insured savings and CD options from Fifth Third Bank were added.
Other significant Direct Plan structure changes were implemented in 2009 when Putnam was eliminated from the Direct Plan. With this change, customized Advantage Age-Based Portfolios were created for the Direct Plan and manager diversification was created through open architecture. A second Advisor Plan, offered by BlackRock, was added in 2009. The Putnam Advisor Plan relationship ended in 2010. OTTA was also moved under the Office of the Chancellor with the Ohio Department of Higher Education in 2009.
“Whatever postsecondary education looks like for your family, we want to ensure that the experience is affordable for all students,” said Ohio Department of Higher Education Chancellor Randy Gardner. “The College Advantage plan has been a national leader in helping families save for college and invest in our students’ future. I congratulate the Ohio Tuition Trust Authority on its 30-year anniversary and wish it continued success in helping students achieve their dreams.”
2013 brought about new way for Ohioans to save for their children’s future higher education with the addition of Upromise, a free rewards program. Upromise members earn cash back from eligible purchases, which they can roll over into their Ohio Direct 529 Plan. Also during this time, Ascensus was selected to provide recordkeeping and portfolio fund accounting services for the Direct Plan.
OTTA celebrated its 25th anniversary by lowering its administrative fee from 0.04% to 0.02% on all its investment options both in the Direct Plan and the Advisor Plan. Program growth in assets under management allowed Vanguard, Ascensus, and BlackRock to also reduce fees. Additional investment option enhancements including age-based glide path changes to the Vanguard Age-Based, BlackRock Age-Based and the Advantage Age-Based portfolios followed.
As the college savings industry continues to mature, new federal- and state-level enhancements have been implemented to further increase the tax advantages of saving in a 529 plan. With the Protecting Americans from Tax Hikes (PATH) Act of 2015, computers along with related services and technologies, were added as a qualified tax-free expenses. The PATH Act also created the framework to allow the re-contribution of qualified withdrawals refunded by a school to be redeposited without tax penalty. The Tax Cuts and Job Act of 2017 added another qualified 529 withdrawal: $10,000 for K-12 tuition. In January 2018, the State of Ohio tax deduction for contributions to CollegeAdvantage was doubled to $4,000 per year, per beneficiary, increasing the advantages of saving with Ohio’s 529 Plan.
For the last 30 years, Ohio’s 529 Plan, has provided families in and out of Ohio flexible options and educational resources to invest for education expenses after high school. Ohio 529 Plan can be used at any federally accredited four-year college or university, two-year community college, trade or vocational school, and certificate program across the country. Open your tax-advantaged Ohio’s 529 Plan today at CollegeAdvantage.com. Someday your child is going to college. Someday starts with Ohio’s 529 Plan.
Ohio’s 529 Plan, CollegeAdvantage, is offered and administered by the Ohio Tuition Trust Authority, a state agency under the Office of the Chancellor of the Ohio Department of Higher Education. Ohio is the sixth-largest state sponsor of 529 plans in the country. CollegeAdvantage is offered as the CollegeAdvantage Direct 529 Savings Plan and the BlackRock CollegeAdvantage 529 Plan, which is offered and marketed through BlackRock and sold through professional financial advisors. Ohio’s 529 Plan offers families a tax-advantaged way to save for education expenses after high school. As of June 30, 2019, Ohio’s 529 Plan has more than $12.4 billion in assets under management and almost 642,000 total accounts. To learn more, visit CollegeAdvantage.com.