Colleges consider delaying tuition bills for families affected by issues with Maryland 529 savings plan

The University System of Maryland, the Maryland Independent College and University Association and the Maryland Association of Community Colleges are responding to requests to delay tuition payments by families who were affected by problems with accounts overseen by a state agency to fund their children’s education.

A group of state senators, led by Democrat Sarah Elfreth of Anne Arundel County, sent a letter Monday to those institutions, as well as Morgan State University in Baltimore and St. Mary’s College of Maryland in Southern Maryland, on behalf of almost 500 people who have said they’ve been unable to access their full account amounts with Maryland 529.


Maryland 529, based in Baltimore, is named for the section of the federal tax code that allows parents to invest and earn money tax-free for their children’s higher education. The agency oversees two plans: a Prepaid College Trust and a college investment plan. No problems have been reported with the latter program, which operates similarly to a 401(k) plan and is managed by T. Rowe Price Group, the Baltimore-based investment firm.

But scores of parents reported being unable to access accounts with the prepaid college trust, which is managed by Florida-based Intuition College Savings Solutions, since April 2022, prompting two Maryland lawmakers to promise to hold legislative hearings.


Maryland 529 said the problems were due to an internal calculation issue and announced Friday that it had addressed a majority of account holders’ issues, though several parents said they were still having difficulties.

The trust accounts allow parents to lock in tuition rates at the time they open accounts; the state pays the difference in tuition increases when a student is ready to enroll in college.

“It is our understanding that the issue will not be resolved in full until March or April of 2023,” Elfreth wrote in the letter, which was signed by 26 senators from both political parties.

“In the interim, account holders have been left unable to access their full account balances to pay for costs outside of tuition payments, such as room and board and other approved educational expenses — forcing families to have to make difficult choices such as entering into high-interest loans or costly repayment plans they were not anticipating,” Elfreth wrote.

In response, the presidents of all 16 Maryland community colleges agreed to delay billing or provide alternative payment options for the spring semester, according to Brad Phillips, executive director of the Maryland Association of Community Colleges.

“We are pleased that the leadership in the Senate shares the same concerns we do when it comes to making certain students do not experience any disruption in their coursework,” Philips said via email.

Similarly, spokespeople for other groups and schools said their institutions would consider the senators’ request.

“Our universities are working with any students and/or families who have been impacted by these difficult circumstances and will support them both in managing the tuition process and reducing any hardships they might face,” said Mike Lurie, a University System of Maryland spokesperson, via email.


Stephanie Thomas, a spokesperson for the independent colleges association, said in an email that the group “has agreed to consider the request and looks forward to working with the impacted families.”

Morgan State will comply with the senators’ request, university spokesperson Larry Jones said via email.

“Morgan State University will work with those impacted to alleviate and/or lessen any concerns they may have relating to tuition billing for the 2023 spring semester and fall semester, if needed,” he wrote.

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St. Mary’s is aware of Maryland 529′s issues, college spokesperson Chuck Steenburgh said via email.

“[St. Mary’s] will ensure our students and their families are held harmless from any delays related to tuition payments from Maryland 529,” he wrote.

A spokesperson for Maryland 529 declined to comment directly on the senators’ letter, but cautioned its reference to a “529 College Investment Program” could erroneously confuse families with accounts in the unaffected college investment plan.

Maryland Senators' Letter

“The last thing, I think, anyone, especially our legislators, wants is to create panic among our 240,000-plus Investment Plan account holders, whose accounts are not at all related or affected by the prepaid earnings calculation error,” Michelle Winner said via email.

Brian Savoie, whose son attends a state school in Indiana, said that Maryland 529 had yet to address his concerns that his Prepaid College Trust account balance did not accurately reflect interest it should have accrued. As of Tuesday evening, he said he hasn’t received any communications from Maryland 529.

Democratic state Sen. Guy Guzzone of Howard County, who signed onto the letter, told The Washington Post last week that the Budget and Taxation Committee that he chairs would hold a hearing on the matter sometime after the General Assembly convenes Wednesday.

The House Appropriations Committee will hold a briefing Jan. 19, according to its chairman, Del. Ben Barnes. He represents areas of Anne Arundel and Prince George’s counties.