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Jonathan Hughes: [00:00:00] It’s not gonna be graceful enough, I know, but okay,

right,

and here we are.

So again, thank you for joining me tonight for MEFA’s presentation on the UPLAN, the power of the UPLAN prepaid tuition program. And so my name is Jonathan Hughes. I’m the Associate Director of College Planning at MEFA. And as it says here, I’ve worked at MEFA for over 20 years, helping families in Massachusetts prepare for college.

So, I have talked to thousands of [00:01:00] families. In my 20 plus years here, and I will be candid and say that savings in general is always my favorite thing to talk about with families because it’s just good. There’s always good you can talk about financial aid, talk about loans, talk about all these things and there’s some good and there’s some bad.

There’s savings is just, um, I’ve always said many times I’ve, I’ve I’ve spoken to so many families who have saved. I’ve never spoken to anyone who has regretted saving. Everyone who has saved is always glad that they’ve done it. Uh, and so it’s something that I, I like to talk about and talk about the importance of, and talk about the specific ways which we have to save.

And, of course, tonight we’re talking about the U Plan. Quick story about the UPLAN. When I first started at MEFA, I was not working on the UPLAN prepaid tuition program. I knew of it, uh, it sort of confused me. I didn’t want to know too much about it. I didn’t want to have to answer questions about it because I didn’t understand it.

And lo and behold, one day, I had to [00:02:00] start answering questions about the UPLAN. I had to learn the program, which I did. And I became a huge fan of it, especially when I did start talking to Upland customers and saw how much they were saving and benefiting from the program. So I really am a big fan of the Upland and happy to be talking about it with you.

So hopefully I’m going to put you through that, that same process that I went through. I’ll be within about 45 minutes to an hour, which is the time we have allotted. So, Quickly about MEFA. MEFA, of course, is the Massachusetts Educational Financing Authority. We were created back in 1982 by the Commonwealth of Massachusetts with a public service mission to help families to plan, save, and pay for college and career readiness.

We do that in a variety of ways. We’re here tonight, um, as part of our, our planning, sort of, our free guidance, education surrounding paying for college. We were created to offer loans, which is something that we still do. [00:03:00] And then, of course, saving. We offer two savings plans, the U Plan and the U Fund.

We’re going to talk about the U plan tonight. We’ll actually touch on both a little bit, uh, but of course, this is about the, the U plan, but the thing I want you to remember is we are a free resource for you to use for any questions that you may have regarding, uh, sending your kids or, or, you know, whoever the student is in your life, uh, to college or career guidance.

So in this webinar, as I said, it’ll take about 45 minutes to an hour. Um, I will. Be answering questions throughout. If you have any questions, you can submit them through the Q& A. The chat feature is disabled. We do have a live transcript feature, so if you want to see what I’m saying printed out on the screen, you can use that.

Uh, and, uh, this is a program that does take some explanation. So I imagine that you will have questions as I’m [00:04:00] going through it. I may answer your questions right away when I see them. I may not. And if I don’t, it’s because I know that the answer is coming in a slide or two or a few slides down the road.

So, uh, if I did not get to your question now, we will have time for questions. After uh, and if I don’t get it, then I’ll reach out to you further and answer your questions after the fact. If you’re registered, which you have, I have your email address so we can do that. Uh, so please submit your your questions and, uh, we can take them or not as the circumstances dictate.

Okay, so what we are going to learn today we’re talking about the U plan and we’re going to talk first about the U plan and the U fund and the comparison between them. The reason that we’re starting off which is a new way of doing this presentation starting off with this comparison is because We offer two savings plans and they have very similar names.

The U Plan Prepaid Tuition Program and the U Fund 529. [00:05:00] Many times people are not quite sure what the difference is between the two. A lot of times people come to this particular presentation expecting to hear about the U Fund. They’ve confused the two. So if you’ve had, if you’ve made that mistake, don’t worry.

People do it all the time. But, uh, the 529 plans are really probably the most well understood and the most well known, popularly, uh, ways to save for college. So we’ll talk about what those are a little bit and how the U plan is different. Okay. So we’ll talk about the basics of the U plan, about the specific benefits.

I would say that any way that you do save for college is better than not saving. The best way to save is the way that you actually do and use those savings. But there are particular programs that carry in a little bit of an extra power, a little bit of extra benefit to them when used to save for college.

And that’s certainly the case of the U plan. And we’ll talk about that. We’ll talk about the. network of colleges and universities, which is important to the plan, how the U plan is treated in terms of [00:06:00] financial aid. And then finally, how you can enroll and manage your account online. So as I said, please keep in mind, um, that you can answer, ask questions throughout and, uh, and, and I’ll be seeing those and be able to answer those as we go.

So again, the difference between the U plan prepaid tuition program and the U fund. 529 plan. So they’re both tax advantage college savings plan that help you set aside funds for future college costs. Now I mentioned that 529 plans are probably the most popular nationally. Uh, the most popular ways, ways to save and the way that those programs work.

It’s relatively simple to explain. You put money into a 529 account. Each state has their own 529. In Massachusetts, we have a program, which is another MEFA program called the U Fund. And so you put money in your U Fund account. And it’s invested. The investments are handled by [00:07:00] Fidelity Investments, and they’re invested in the market, and they grow along with the market, uh, and that is how, and they grow tax deferred, and that is how you gain value on that program.

The prepaid tuition program is different. So, you put money into your prepaid tuition program, uh, it’s not invested in the market. It is invested in general obligation bonds. And some of these things we will, uh, repeat later on throughout the presentation, or they’ll be reflected in later slides, but, um, you put funds in and based on how much you put in that buys a percentage of this year’s tuition at each participating college in Massachusetts, all the participating colleges are in Massachusetts, uh, and the percentage that you lock in.

Depends on the amount that you put in and it depends on the college. So in a way, you’re freezing that [00:08:00] tuition value, the percentage that you put in against further increases. Now, as far as where the actual money goes, it’s invested not in the market, but in bonds that are backed by the full faith and credit of the Commonwealth.

So it’s not subject to market volatility. They’re in general obligation bonds. Um, now what you can actually use or you plan funds for that percentage that they lock in reflects tuition and mandatory fees. We’ll talk about what that means in a few slides, whereas the U Fund, you can withdraw funds and use it for tuition, fees, room and board, books, supplies and equipment, and retain your tax free status.

So the U Fund, you put funds in, it grows tax deferred. When you pull the money out, as long as you use it for these qualified expenses, you don’t pay taxes on the earnings. And that’s how a 529 plan works. [00:09:00] So for the U Fund, again, this is for use at any accredited college in the country. Actually, some international colleges as well and some vocational training schools, as long as they are set up to take us federal funds.

So there’s a lot of variety and how the 529 plans can be used. You plan. It’s more circumscribed, but the effects can be quite dramatic. So we’ll, we’ll see that in a minute for the you plan. This does have to be used at a participating college. If you are going to apply. You have to retain the value that that percentage of tuition that you locked in.

It has to be used at a participating college, of which there are over 70, and they’re all in Massachusetts, and we’ll see them in just a minute. Also, the U plan must be used for undergraduate education only, whereas the U Fund 529 plan can be used for undergraduate or graduate. Now, of course, with the U plan, the big question is always, okay, well, if they have to use it at one of these participating colleges, [00:10:00] what happens?

If the child doesn’t end up going to one of those participating colleges, um, if that’s the case, you can do one of three things. You can hold on to the funds until, uh, unless, excuse me, you can hold on to the funds once they mature if you think that the student may change their mind. Let’s say that plans aren’t final after high school.

You have this U plan money coming up. You think, you know, maybe you know, my child’s not going right to college, but He or she may later on, you can wait on that for a while. We can hold onto these certificates for up to six years or so after they’re set to mature and we’ll talk about maturity and all that stuff in just a, just a little while.

Um, so you can do that. You can sort of just wait and see what happens. And you could also trans, you can do that with the 529 as well. And again, just like the 529, you can transfer beneficiaries. So if you have a saved for, [00:11:00] uh, And that child doesn’t end up going to that, to a particular college or, or a college at all.

But there’s somebody else in the family that could use those funds, you can transfer those funds over to that other beneficiary. So that’s the case with both the U plan and the U fund. Now for the U plan. It diverges from the U Fund here. If you have to withdraw funds, and you can’t use them for a qualified extent, you can’t use it for, in the case of the U Plan, a participating college.

Then you just get what you put in plus the interest back and there’s no tax consequences for doing that. So really the worst you’re going to do is get what you put in plus the interest back from the U plan without tax consequences. And the interest accrues at CPI on the general obligation bonds.

Whereas, uh, the U Fund, if you have to withdraw funds and use it for an ineligible [00:12:00] expense, then the earnings are subject to a 10 percent penalty and they’ll be taxed at the owner’s rate of income. There’s one more thing with the U Fund that I’ll mention. It’s, it’s written here that, uh, if the beneficiary doesn’t end up going to college, you can transfer funds into a Roth IRA for that beneficiary.

It has some. Sort of stipulations that you have to meet but that is a new option. Uh, I think it was just last year that it was put into place and people are really excited about it because That’s a fear that a lot of people have is that they’re going to set aside money for their Child for college if they’re not going to use they’re going to get a tax So there is a way to still sort of contribute to the welfare of the beneficiary and not be subject to those taxes.

But the big difference between these two plans comes with the cash out. If you’re not. going to be able to use the funds the way you intended them. So for the U plan, you just get what you put in [00:13:00] plus the interest back. No tax consequences for the Commonwealth of Massachusetts and none federally. If you live outside of Massachusetts, your state laws may be different.

Okay. I see a question here.

Okay. So, uh, It’s about contributions to a 529, I think. Um, obviously, uh, so basically

let me, let me deal with that a little bit. If you don’t mind, I’ll come back to that at the end. Uh, because it’s just, it’s, I think it’s on another topic, but, uh, okay. So this is how I want to explain, generally speaking, how the plan works. You put in a certain amount of money, depending on that amount.

That’s going to buy a percentage of tuition at each participating college in the plan. So let’s say that your [00:14:00] contribution for this year is 1, 500. So, if you put in 1, 500 starting in 2025, and you say, my child is going to school in, well, let’s say, 2040. What year do we have here?

2035, rather. Let’s say you put in $1,500 and at a particular college that costs 15,000, that buys 10% of tuition. You say, okay, 10% of tuition. My child is set to go to school in 2035. By the time my child goes to college in 2035, if he goes to that particular college, let’s say that college tuition has increased to 30,000.

So it’s doubled. Right? Well, in that case. Oh, excuse me. In that case, our, um, our value grows along with it. So let’s see here. 1, 500 invested in 2025, [00:15:00] university tuition of 15, 000. Okay, that buys 10 percent of tuition locked in. By 2035, tuition has increased to 30, 000. So we have 10 percent of 30, 000 or 3, 000.

So our 1, 500 investment today Doubled so 3, 000 in 2035 because tuition doubled to 30, 000 in 2035. So our investment is keeping pace with the increase in tuition. And that really is the essence. Of the U plan. Uh, so it’s essentially a bet that the increase in tuition will outpace the cost of inflation as historically, uh, has done.

Um, so this year, let’s say again, in our example, we’re putting in 1, 500, 15, 000, uh, is the cost of tuition at that one particular college. If we put in [00:16:00] that same amount next year, uh, at that particular college, Tuition has gone up from this year to next year. So our $1,500 is not going to buy 10% next year.

If that tuition has gone up, it may be May by 9%, may buy 9.5%. Uh, so essentially that 9% or nine point half percent. Would be added on to that 10 percent and you would have 19 and a half percent of tuition. And then, you know, the next year and so on. So you would get an annual statement every year that shows you the amount that you put in, the interest that accrued on it, each participating college and university.

And what percentage of tuition you have purchased there for the maturity years that you selected. And again, just a reminder that the U Plan locks in only tuition and mandatory fee expenses. So, tuition is tuition. Mandatory fees are defined as fees that every student has to pay [00:17:00] regardless of their major, regardless of the year in college that they are in, regardless of whether or not they live on campus.

So, um, you know, certain students Freshman orientation fees won’t be covered, for example, because that only affects freshmen. Uh, room and board expenses are not covered because that only affects students who live on campus and not commuter students. Um, lab fees would only affect certain students taking certain classes.

So mandatory fees are defined by, as tuition, I’m sorry, mandatory fees are defined as. Fees that every student has to pay, regardless of those circumstances, and schools get us their tuition and their mandatory fee figures. They don’t necessarily break down to us what are considered mandatory fees or not, but they just say, here’s tuition, and here’s mandatory fees for the upcoming year so we can figure our percentages and the value of our percentages based on those.

[00:18:00] And

this slide is just to show you, of course, that various colleges have various, uh, tuitions, and that the same initial investment of 1, 500 in this example is going to buy differing percentages, uh, of tuition and fees at different colleges. So College A is 15, 000. From our example, we bought 10 percent of tuition.

College B, 30, 000. We bought 5%. And College C, 50, 000. We bought 3 percent of tuition. So I see some questions coming in here. Let me see if I can answer them.

Great question. So I am going to answer this in a minute, but I’ll answer it now. Do you have to pick the college or university when you sign up for the U plan? You do not. You don’t pick that. The only thing you pick when you are signing up for the U plan, you have to choose who the owner of the account is.

The owner is the only person who can actually transact. So they can only take funds out if you’re the owner and direct them. Um, you have to choose the beneficiary. So the [00:19:00] and then you have to Pick the maturity year or years. So this is one or more years the student should be enrolled in college for. And so, uh, this is, since the funds are invested in general obligation bonds, that is the maturity year of the bond.

So those, that, those, those are the things that you, and of course, how much you’re putting in and the regularity with which you’re putting money in.

Okay, so the next question is are all the participating colleges included and whatever school is picked, there will be a look back as to what your percentage was each year. Yeah, so you’ll, you’ll get an annual statement every year shows you what percentage you purchased. And you’ll be able to also call our ePlan department or access your account online and get assistance with that as well so you’ll be able to, to figure out what percentage you have purchased and then as things approach closer to maturity.

You know, you’ll be [00:20:00] able to figure out how much that actually translate to at a school. Okay, thank you. Good questions. Okay, so that’s generally how the plan works. The basics of how it operates. You can open up a Uplan account at any point throughout the year, and you can contribute to the account throughout the year as well.

It used to be that we had a two month enrollment period every year, and you had to get your enrollments in. You can Open throughout the year now and contribute throughout the year with the exception of a two week blackout period that lasts between July 15th and August 1st. And so the reason that there was this blackout period is that, um, as I mentioned, The U plan funds are invested in general obligation bonds.

So there is a bond purchase every year. So, uh, we take all the funds that, that customers have contributed. to their account throughout the year. Um, they put [00:21:00] funds in, it’s handled at our servicers, this contribution accrues interest at a money market rate, and then at the bond purchase, whatever balance you have, your contributions plus the interest, that is the money that purchases your certificate and locks in your percentage.

And so that is set on July 15th, and the bond purchase occurs. August 1st. And it buys a percentage of that year’s tuition and fees. Okay, you lock in the rates at over 70 public and private colleges in Massachusetts. Your savings must represent, must be over 300 though in order to do that. So 300 is the minimum to purchase a Upland certificate.

You can open an account with nothing. You can open an account and put 10 in, you can put 100, you can put whatever amount it is that you want in there. But in order to lock in [00:22:00] tuition, you have to have at least 300 by the, in your account by the time of the bond purchase. So let’s say you. open an account in September and you contribute, you know, 100, uh, every, every month to that account.

Well, by the time July 15th rolls around, you’ll have about a thousand dollars or so. So you’ll be able to, um, lock in about a thousand dollars plus the interest of whatever to, you know, and lock in whatever percentage that is. If you opened up that same account, for example, in The beginning of July and you put in a hundred dollars or June, you put in a hundred dollars in June and you put in a hundred dollars in July, that’s not going to be enough to buy a certificate and to lock in a percentage of tuition.

So what would happen then is your money would just stay in the account. It would continue accruing interest. And let’s say you’re, you’re contributing a [00:23:00] hundred dollars a month. Then by that time next year. You would have surpassed 300 and be able to purchase a percentage of the following year’s tuition with that 100.

So that’s how that works. Now there’s no, there is a minimum of 300 there is no maximum limit. So there’s no maximum to the amount you can put in the plan, and you are not required to live in Massachusetts, in order to participate in the U plan.

Now on the topic of the bond purchase and the percentage of tuition that you, you lock in, um, it gets a little tricky because of the timing. So funds deposited by July 15th, 2025. So this year’s upcoming bond purchase, we’re going to take all those funds that you contributed to your account. by a percentage of tuition.

But the [00:24:00] tuition that we’re going to be basing that purchase on is 2025 2026 because it occurs August 1st. That is the beginning of the 2025 2026 academic year. So in a sense, you’re putting funds in now and you’re buying next year’s. Uh, rate because when the bond purchase occurs again, that’s going to be the next academic year.

So there might be a little bit of guesswork if you’re trying to figure out exactly how much you want to put in. If you have a school in mind, if you have a percentage in mind, if you want to, you know, have really firm plans in that respect, um, it might be difficult to get an exact. So you may have to estimate a little bit.

Or the other thing is this, we send out You know, notifications to the colleges in spring asking for their tuition and mandatory fees. And some of them respond to us very quickly and get us the upcoming [00:25:00] year’s tuition and fee figures. Some of them said it quite late in the year, but we are updating them as they come in.

So, you know, you can check on whether or not if you have a college in mind, whether or not they have gotten their tuition and fees to us and see sort of work out what percentage of tuition you’re going to purchase with your contributions. Um, funds deposited after July 15. 2025. So again, if you’re contributing throughout the year, um, you know, all the funds that you have deposited before July 15th are going to go towards the 2025 2026 year.

After August 1st, after the bond purchase, anything received is going to go towards the 2026. 2027 academic year tuition and mandatory fee rate. So it’s a bit split in the middle of the year. Any questions on any of this? I know this might sound really confusing. So I’m just, uh, don’t be afraid to ask questions.[00:26:00]

Okay.

So some more benefits of the plan. The money does grow federal and Massachusetts state tax free. Um, There is one or two tax forms that may be generated. Um, the, the, probably the most relevant one is, is a 10 99 div that you may receive, uh, and the reason for that is. You know, when you invest in the plan, you buy certificates, you select a maturity year money is, is invested in that bond and it’s accruing interest at CPI, the consumer price index.

None of that money is, is taxable. Um, after the funds mature. Let’s say you set a maturity date that you believe is going to be your child’s freshman year in college. Maybe you’re off by a year and you have to keep funds in one [00:27:00] year late, uh, and use it the following year. You can do that, um, and your account will still continue to accrue interest at a money market value after it is matured.

So all of that interest, that post maturity interest that accrues. After a certificate is matured, if it’s over 10, then it has to be sent out to you in a 1099. And the same thing with pre bond purchase interest. So remember I said you put money in, it’s held in an account, it accrues interest at a money market value before the bond purchase.

If that interest accrues interest, uh, I’m sorry, if that contribution accrues interest over 10 in a year, that has to be sent out to you in a 1099 as well. Now you may or may not, we’re not tax professionals, you may or may not be paying taxes on that money, uh, that’s between you and your tax preparer. [00:28:00] Um, but that is that that is probably the only time that there may be any tax consequences, and it’s not related to using the funds at all.

It’s into, it’s regarding interest that has accrued on it after or before maturity. Um, so any unused money is returned without penalty and with interest accrued at CPI. Again, this is our, our, um, Circumstance where the student can’t use the funds at a participating college and has to cash out. And savers can claim, if you’re living in Massachusetts or paying Massachusetts income tax, you can claim a deduction of up to 1, 000 for your contributions if you’re an individual filer, or 2, 000 for your contributions if you are a married filer filing.

jointly. Um, so that’s just another sort of incentive and that, that is something that is shared with the 529 plans as well. Now to answer a question that’s [00:29:00] already been asked here and answered, there is no need to select a college until it’s time to attend. And so here, I just want to leave this up for a minute here because these are all the participating UPLAND colleges and universities in Massachusetts.

So you can see, I believe all of the public colleges are represented. Many of the private colleges are represented as well. You can see Boston College, Babson College, Boston University, Amherst. This is the first column. Um, so there’s a lot and there’s a lot of variety there. The colleges, um, that maybe people are going to look for and not see right away, like Harvard, um, you know, draw from, frankly, an international population.

Um, so if, if you are. Going to Harvard or MIT or one of those colleges that is not in the, in the plan. Um, you can again cash out, get what you put in plus the interest and use that for tuition, fees, books, supplies, whatever you want to use it for. [00:30:00] But I think, you know, you can see that there’s a wide variety of colleges here.

And actually, if you go to MEFA. org and go to the U Plan section, you can see not just all the colleges, but you can search the colleges and it’ll show you the most recent tuition and fee figures as well. So you can see what, what’s there.

Someone wants to know if you’ll be taxed when you take the funds out if your child can’t attend undergrad. No, you won’t be taxed. At least not at the Massachusetts state level and not at the federal level. So again, if you live in another state. You know, it’s possible that there are other laws there that that may make that taxable, but not not here and not federally.

All right. Now sometimes people want to know what happens if a college leaves the plan or joins the plan. And I must say that the list of participating colleges has remained fairly static. Colleges, they are going to [00:31:00] join the U plan, have to enter into the U plan agreement. With the U plan to to honor all of the certificates that were purchased, um, since 1995, which was when the program began.

So, um, you know, if you have a plan already and a college just enters and you want to use that college, it has to honor those certificates that were previously purchased and sort of predate to their tuition percentages. Consequently, if a college or university job drops out of the U plan, it again has to honor all the certificates purchased prior to the year it withdrew from the program.

So it has to grandfather that that value in. As I said, the list has remained pretty static. There are some colleges that have dropped off of the list, but not because they stopped participating in the program. But, you know, there have been some school closings and some mergings over the past 15 years or so, and that’s really been the big change, [00:32:00] such that there is to the list.

See another question here.

So if you’ve already contributed to the 529 and you have the maximum state income tax deduction, the contributions to the U plan will not get further deduction, correct? That is correct. So the that limit of 2, 000 or 1, 000, depending on your status, uh, is, is the absolute limit per filer. So, but I appreciate the questions very much.

Now, in terms of how you, the plan is treated in terms of financial aid, it’s essentially treated just like any other asset is in terms of financial aid. So, um, Assuming that the parent is the owner of the Uplan account, it is created, it is treated as a parent’s asset. And as a parent’s asset, it’s treated just like any other parent’s asset, which is to say, fairly lightly in the calculations.

So the value that you’re going to be expected to [00:33:00] list as part of the Uplan, you won’t have to itemize it out, but when you’re, when you’re saying, okay, this is my Uh, balance of, of assets. What you should be basing the U plan on is not the percentage of tuition, but just what you put in plus the interest.

So let’s say your, your current value, you put in 5, 000 10 years ago, there’s 500 that of interest that accrued on it. Then that’s a 5, 500 asset in terms of a FAFSA, just as an example. Uh, and of course the financial aid formula assumes that families will use. up to just 5. 6 percent of parent assets to pay for college.

So, um, you know, all of the parents assets on a scale, they’ll take 5. 6 percent of that total and say, this is what you should be using to pay for college. Income is weighted much heavier, but assets are. pretty, um, lightly weighted in the calculations. That’s if the parents own the U Plan account. If somebody [00:34:00] other than the parent owns a U Plan account for a child, which is possible, could be a grandparent, could be an aunt, could be an uncle, could be anybody, um, then it doesn’t get.

Looked at at all, really. Um, so that’s, that’s something, but, um, again, the own, just can remember that the owner is the only person who can actually take money out of the account. So I know sometimes with assets and financial aid. People get very concerned with moving things around so that the college doesn’t see this asset or that asset.

Really, it shouldn’t make that much of a difference, um, but that’s how it’s treated.

Any other questions on the program itself before I move into how to actually enroll in the plan? Oh, I see a question coming in.

If you open up accounts for your niece, will those assets count as assets towards your children? No. Uh, [00:35:00] I see which is towards your children. No, they will not. Um, So this is a change of the FAFSA recently. Um, it used to be that you, if you had a college savings account or a 529 or, or something like it, that you would have to list the balances of all of them on one FAFSA.

So if you had three kids and two nieces, um, So you get five accounts, you would have to list that, the grand total of those five accounts on each child’s FAFSA. That’s not the case anymore. It’s, it’s, it’s beneficiary specific. So you would not have to do that, but thank you. It’s a, it’s a good question. If you are the beneficiary as the parent on the account, but not the owner, would it still be considered a parent asset?

Hmm. That’s a [00:36:00] good question. So if you’re the beneficiary as the parent on the account, But not the owner.

Who’s the student in this case? Is this a graduate student? Is the parent going to graduate school?

Think about this. If you’re the beneficiary of the parent on the account, but not the owner, will it still be considered as a parent asset? That’s a good question because I know, uh, If, if it’s the same, possibly, I can find out, because I know that’s the case with 529s, even though technically, uh, it almost never happens, but, um, if, if a, a child is the owner of the 529, then it still gets counted as a parent asset.

This is actually a good thing because student assets are weighted heavier than parent assets. So, um, [00:37:00] so yeah, so as a student. An asset is weighted at 20%. I’ll take 20 percent of that asset, uh, as to what you can pay for calls. So if you have 10, 000, they’re going to say, okay, you can spend 2000 of that. Uh, whereas if it was the parent as that you had 10, 000, they’d say, okay, you can spend 560 of that.

You just have the rest of it and not considered for aid. So, um, so yeah, it should be, I believe it should be listed as a parent asset. But I can, I can double check on that and get back to you because it’s quite specific for the FAFSA, or at least it was, that student, if a student owns it for the 529, it still gets treated as a parent asset.

Since the U plan is a prepaid tuition program, it’s more of a niche program. Uh, some states have prepaid plans, but, um, it’s not like 529s where [00:38:00] every state has them. Um, but I think it might be different, but I’m fairly certain that it sticks to the 529 rules, but I’ll find out and let you know. That’s a good question.

Thank you. Great questions. This is good. Um, okay. So if you’re interested in the U plan and incidentally, you could do both the U plan and a 529 like the U fund. So, you know, you could lock intuition of these with the U plan and sort of gain that value. As tuition goes up and have a 529 and use that and be able to use the tax advantage that way to use for things like room and board and, you know, books and fees and equipment.

So that’s possible. Regardless, if you wanted to enroll in the U plan, you go to MEFA. org, go to the U plan page, click start saving,

and you have [00:39:00] to You know, start your, your process here by putting your first name, last name, email address, mobile number to be texted, um, you know, clicking that little box and, and moving on. So, uh, if you want to start saving with the plan, you would click complete enrollment. Now, if you already have an account and you want to just set up an online account, you could do that.

Or if you want to log in as we have, of course, online access to the plan, that’s the same username and password that you’re about to set up to do this, that you would use to log in. So. Enrollment steps provide the account owner information that’s named, date of birth, social security number, address, uh, decide who’s going to be the owner, who’s going to have the authority to transact on that account, designated beneficiary.

So again, these are the things that you need to set up an account. Who’s the owner? What’s their sort of basic info? Who’s going to be the student? What’s their info? You can designate a successor owner, but you don’t have to. And you can always do it later as well. So what a successor [00:40:00] owner is, is, um, as I mentioned, the owner is the only person who can use the account.

If something were to happen to the owner, the owner were to pass away, um, and there’s a successor owner on the account, then the ownership will be able to be easily transferred over to that successor owner, where they could then just assume ownership of the account and being control and transact if there’s no successor.

A lot of people assume it just goes straight to the beneficiary, but you need to be 18 to be the owner of the U plan so many times a beneficiary is not going to be 18. So it’s not set up that way you would have to go to probate and they would have to be, you know, who’s the executive of the state and it’s just a more lengthy process.

And if there’s a success or owner, but you need, you know, name, social security number. And, uh, date of birth and, you know, some info that you may not have when you’re setting up. So you can choose to skip that option. And if you want to add it later, you can always do [00:41:00] that. Okay. So you need to know those things.

Really. The most important part of this is going to be selecting maturity years. And let me tell you why. So The maturity years are the years in which the, the bonds are set to mature. Money is put into a bond, it’s invested, but that money is not liquid until the bond matures. Meaning if you put money in and you say, okay, I am selecting 2035.

To use this money, you’re not really going to be able to get that money until 2035. And it matures August 1st of its maturity year. So August 1st of 2035, um, because the money is not liquid yet. So the maturity year or years should be one or more year that the student is anticipated to be in college. Now we have a maturity year selection guide on our website that says.

If your child’s in grade five, for [00:42:00] example, this is the year that they should be entering college. Grade six, you know, this is, et cetera, et cetera. Um, it, it, take your best guess. Especially if you’re saving early, which is the best way to start saving, really, really early. Um, it’s gonna be a little bit difficult to figure out exactly which year they’re going to be starting college.

Um, so, it’s not unusual for people to be a year early or a year late. Nothing’s happened to people get held back people skip grades. There might be medical issues that come up and not ready to start school yet. Again, we can hold on to these until six years after your maturity year. So let’s say You anticipate a year early, and it turns out, you know, instead of 2035, your child is going to go to school in 2036.

So if that happens, we can just hold on to that certificate, and you can use it in [00:43:00] 2036. I should mention, though, that the percentage that you have purchased is a percentage of the maturity year’s tuition. So it’s not going to continue to keep pace. With tuition, once it’s mature, there’ll still be interest that gets added to it, but it’s not going to keep pace with tuition.

It’s frozen at that maturity year level. So that is, you know, in our example of, uh, we put in 1, 500 this year, that buys 10 percent of tuition. College is 30, 000 in 2035. So he’s got 10 percent of 30, 000 or 3, 000. Even if that child goes to school in 2036, they still have 3, 000 because you have a percentage of the maturity year’s tuition.

And so that’s what you have is 2035 tuition. So you still get all of the value up until the year matures. It’s just that after that, um, if you. [00:44:00] Selected a year that is too late and you want to move it earlier. You can request that Uh, and and we’ll see if we can do that Um, same thing with early withdrawals If you have an emergency and you want to get those funds out that you you put in We will you can request it and we can honor that that one will do it Uh, but it depends on our bond supply There’s a lot of sort of behind the scenes things that need to happen.

We do keep a running tally of all those requests and we try to meet them but when it’s not guaranteed that we’ll be able to do it. So you want to select your maturity year or maturity years. So, um, That is you can select one year or you can select four years for maturity years so you can buy a percentage of tuition for each anticipated year.

This year, or you can try to front load it for the first year or, you know, people have different strategies. But that’s what you need to do. And then you can put your [00:45:00] funds in and you can do a one time deposit, or you can set up an automatic withdrawal. Okay, somebody wants to know, does the Roth IRA count as a student asset?

Um, does the Roth IRA count as a student asset? No, it’s a retirement asset. So, if it’s a retirement IRA. Oh, it’s an education IRA. Um, it depends on who the owner of that is. I’m not an expert on IRAs, but um, But let me come back to that.

So if the student is the owner of the Roth IRA, then it would be a student asset and it would be taken at 20%. Same thing with the UGMA or UTMA account, student asset at 20%. Okay, so make a one time savings deposit or set up automatic savings. So, This is what I just mentioned earlier, selecting maturity years, [00:46:00] probably the most important thing you’ll do.

Now, in terms of adding funds, you can add your bank account information when you’re setting up your account online. Uh, you can send in a check. Um, so. couple of different ways you could make deposits. We also have, and it’s fairly recent, a gift of college card that you can, if you, somebody gives a gift of college card to you, you can use that to, uh, to put into your U plan.

Um, And again, you can do a one time enrollment or you can have automatic withdrawals and you can set that up for a monthly withdrawal or a withdrawal that’s quarterly or a different sort of frequency. Um, and you can do that throughout the year. And again, the purchase, the percentage that is, is going to be based on your balance in your account on July 15th.

Now once you have your account set up [00:47:00] and you have online access to that account, you can use that to add more money into your account. You can review your statements. We currently send out quarterly statements as well as annual statements, so I think that may be changing and going back to annual statements, but uh, you can check your balance.

That is what you have plus the interest. You can actually request disbursements through the account online or over the phone even at the moment you’re able to do that. Uh, so you can handle cash outs that is a cash out to you as an owner and get what you put in plus the interest or direct it to a college and get a percentage of the percentage of tuition.

Uh, and you can change your contact information as well. So. Getting started, you can enroll at MEFA. org slash UPLAN. That’s a QR code there. If you wanted to start that enrollment process, just, uh, take a picture of that QR code. It’ll send you right to that proper page. Uh, again, in general, you can sign up for MEFA emails on MEFA.

org to [00:48:00] receive timely college planning and guidance. And you can use MEFA’s college cost projector to estimate future college costs. So there’s lots of different calculators and tools, um, on MEFA. org to be able to estimate future college costs. Just bear in mind that is probably not Well, we do have a feature cost calculator that does not take into account financial aid.

So if you see a gigantic cost, uh, ask yourself, is there aid involved here? Because, um, a lot of people forget about financial aid. And the fact is that most families are going to be eligible for some level of financial aid. Um, so connect with us on our social media platforms, Facebook, that’s Mipha MA, Mipha underscore MA at Instagram.

at MEFA tweets on X, uh, our [00:49:00] YouTube channel, our podcast, and our LinkedIn information there. And if you have any questions in the future, this is our phone number and our email address at collegeplanningatMEFA. org. And I will be available to answer any questions. Let me see, I’ll take a quick spin at some of those questions that I held off on.

I’m gonna stop recording as well.