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Maryland

Maryland 529 agency says it has addressed majority of accounts with problems in the Maryland Prepaid College Trust

Maryland parents said this week that they hadn’t received answers as to when they’d be able to access state accounts that contain their children’s college education funds, even as tuition payments were coming due for the spring semester.

But Maryland 529, the state agency that oversees the system said Friday evening that it had resolved errors associated with the calculation formula for the Maryland Prepaid College Trust.

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In a statement, Maryland 529 Executive Director Anthony Savia said 419 out of the 480 accounts that reported having issues accessing their interest payments had been reviewed and addressed.

Account holders with the trust have reported being unable to access their money since April due to what the agency described as an internal calculation issue. Anxious parents said they dipped into personal savings or took out loans to cover their children’s school expenses.

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Maryland offers two funding plans, a prepaid college trust and a college investment plan, through Maryland 529. The agency is named for the section of the federal tax code that allows parents to save money and withdraw it tax-free at a later date to pay for their child’s education.

The trust allows parents to lock in tuition prices from the time they open an account; the state pays any increase in tuition charges. The trust is backed by a state legislative guarantee, so the state is obligated to pay the benefits offered. The trust is managed by a Florida-based company, Intuition College Savings Solutions.

The college investment plan, which is run through Baltimore investment firm T. Rowe Price Group and operates similarly to a 401(k) plan, is not affected by the interest calculation problems.

Maryland 529 said earlier this year that it would prioritize addressing complaints from parents whose children are in college and rectify the situation by fall 2022, but it missed every self-imposed deadline, affected account holders have said.

After The Baltimore Sun requested updates repeatedly this week, Maryland 529 responded late Friday with its statement.

“It has taken time to resolve this issue because it was important to ensure that the trust accounts were carefully prioritized,” Savia said in the statement.

“Quality control measures were put in place to correct the calculation for all [Maryland Prepaid College Trust] Tuition plan account holders and ensure accurate reporting going forward ... I can say with confidence that the calculation formula has been corrected in accordance with the Tuition Plan Disclosure Statement.”

Savia said outside consultants were “moving through the remaining individual account manual reviews as quickly as possible to correct all remaining Tuition Plan accounts.”

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A company that recently acquired Intitution called Catalis had issued a statement earlier in the week, saying it was confident the issue would be resolved soon.

Maryland 529 began seeking a crisis communications firm Dec. 29, according to an invitation for bids that The Baltimore Sun obtained.

The bidding, which closed Thursday, asked for a firm to provide a “strategic crisis communication strategy,” “control messaging,” “help agency spokespeople when responding to questions” from the public and reporters, develop ways to manage and respond to “negative or inaccurate [social media] posts and comments,” and help repair Maryland 529′s reputation and “rebuild public trust,” according to the invitation. The contract has a maximum value of $50,000. It would begin Monday and run through June 30, with an option to extend.

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“We’re only nine months into this and now they’re hiring a crisis firm?” said Brian Savoie, an account holder who hasn’t been unable to draw money since August from his prepaid college trust account for his son.

Another parent, Ray Mahar of Howard County, said a Maryland 529 employee told him Thursday that his interest payments would resume by the end of the month. He was skeptical, through, because the agency had missed previous deadlines.

He’s been asking where $18,000 in interest and earnings went since he attempted to draw $8,000 from one of his daughter’s two college fund accounts to pay for her room and board and was told he had only $6,200 left.

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“This really needs to get more attention from people in Annapolis as to how this is affecting thousands of kids’ future college attendance,” Mahar said in a text message.

To that end, two lawmakers have promised to hold hearings to get answers. The House Appropriations Committee is scheduled to hold a briefing Jan. 19 on the Maryland 529 calculations errors, according to its chairman, Democratic Del. Ben Barnes, who represents parts of Anne Arundel and Prince George’s counties.

Savia said Maryland 529 “looked forward to explaining and working through this issue with the General Assembly.”

Democratic Sen. Guy Guzzone of Howard County told The Washington Post that the Budget and Taxation Committee he chairs also would hold a hearing early in the General Assembly session, which begins Wednesday. Guzzone was unavailable for comment, according to Deanna Peel, his chief of staff.


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