Maryland lawmakers held a hearing Thursday into an interest miscalculation for the state's prepaid college tuition plan that means many families don't have as much money in their accounts as they thought.
The hearing room in Annapolis was packed with parents and students wanting to know where their money went.
Some families say they can’t access all of those funds, with some now taking on debt to help pay for tuition and other bills.
“In order to pay Daniel’s fall semester tuition, we refinanced our home,” Wendy Hall said. “In doing so we lost our historically low interest rate.”
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Families invested money into the fund. That money then gained interest over time. But in 2021 a calculation error led the Maryland 529 plan to temporarily freeze some of the interest funding as they fixed it, but that fix left some parents with thousands of dollars less than they thought.
“Prior to Jan. 6 of this year, our funds were being delayed,” parent Brian Savoie said. “Now, they’re being denied.”
Officials with the 529 plan said almost 500 families are affected and some received letters incorrectly stating the value of their accounts.
The plan has hired a crisis management team at a cost of $50,000.
“On behalf of the members of the Maryland board, I want to apologize to our account holders for how difficult this has been for you,” Maryland 529 board Chairman Peter Tsirigotis said. “We’re committed to resolving this issue for Maryland 529 families.”
Lawmakers are considering legislation to improve communication, transparency and accountability on the 529 board.
“It is also going to make sure that we have better oversight as a legislature, such as having an ombudsman, and as well look at how we can make who have still not been able to recoup their funds,” Del. Jheanelle Wilkins (D-20th District) said.
Most account holders, if not all, have always had access to their principal balance, just not the interest earnings.
Some lawmakers are asking schools to delay tuition bills for affected families until this can be straightened out.
