Editor's Note: Since this story was published, the chair of the Maryland 529 board resigned on Jan. 20, one day after the contentious Jan. 19 committee hearing, according to a notice on the state's website. Geoffrey Newman is serving as interim board chair until a new chair is elected during the Feb. 23 board meeting.
Joseph Dubsky worries that he won’t be able to finish his freshman year at The University of Maryland, College Park campus.
“I'm having a great time, but without that money, I don't know if I can continue my education there," he said. "So I might need to, like drop out and go somewhere else. And that will be a big impact on my life.”
Dubsky is one of the hundreds of students whose Maryland 529 college savings account has been affected by a calculation error.
The miscalculation has caused stress for account holders, most of whom are parents, who have had trouble accessing funds for nearly a year. Parents said they were led to believe that more money was in their account last year. The Maryland House Appropriations Committee held a briefing in Annapolis on Thursday afternoon to get to the bottom of the issue. The state director for the program claims that benefits were never frozen and that any account holders should have access to their money. One state representative chided state officials for the errors. It remains unclear what the solution may be.
Peter Tsirigotis, chair the Maryland 529 board, said the error was discovered in 2021 when the agency updated its computer system and transitioned to a new program manager, Intuition College Savings Solution.
Maryland 529 as a college savings program, was established in 1997 and is the state’s education investment program. When opening an account, Marylanders can choose between The Maryland Prepaid College Trust and the Maryland College Investment Plan.
The prepaid choice allows account holders to “secure tomorrow’s tuition at today’s prices,” while the latter choice offers a range of investment options, according to the program’s website.
To express their frustrations with the college savings plan, parents from across the state joined a Facebook group called Free Our Interest Now. Parents who have had issues accessing money previously added to the program to pay for tuition costs joined the group.
One parent, Austin Bachmann who rallied outside Thursday's briefing said, “I had my statement printed out on December 31, 2021, showing nearly $100,000, I checked it again in March [2022]. And it's half that. It’s basically what I paid into it and it just has no explanation.”
Another parent from the Facebook group, Kathy Stisted said, “the most frustrating thing for us has been the lack of transparency and the lack of honesty.”
Anthony Savia, executive director of Maryland 529, apologized for lack of communication and said the situation is a misunderstanding.
“The calculation that was used to give the earnings back to account holders was inaccurately reported to them and had to be corrected," he said. “Tuition benefits were never frozen and account holders continue to have access to their principal contributions.”
But his explanation left legislators and parents in the crowd alike visibly frustrated.
To resolve the issue, Maryland 529 program leaders said that they hired accountants to manually recalculate nearly 500 out of 31,000 accounts affected by the error.
Chair of the committee, Del. Darryl Barnes who also represents District 25, said the situation is disgraceful.
“These families have put money into these accounts. This has been created by this legislature, so the working people can save that for their children to go to college," Barnes said during the meeting. "So what we need to hear today is, how did we get here? What are we going to do to fix this issue? And what are we going to do to avoid these issues in the long term?"
Legislators said that the issue should be the Maryland 529 program leader's priority and demanded that they hold an emergency board meeting to find a solution, provide more information such as the demographics of account holders affected by the error and the miscalculated and accurate amount for each account.
Additionally, they suggested that the state administrators use leftover money from overfunding to reimburse any holders like Wendy Hall who had to find an alternative way to afford tuition this semester.
During her testimony in front of the House Appropriations Committee, Hall said she was unable to use the money in the savings account that she opened for her two sons in 2007, so she had to refinance her home.
“In doing so, we left our historically low-interest rate and we now have of course a higher monthly mortgage payment, and we'll be paying at least another $16,000 in interest on our mortgage," Hall said.
Correction: A previous version of this story inaccurately identified Del. Darryl Barnes.
