State treasurer: Take advantage of Iowa college savings accounts

By Bob Steenson, bsteenson@charlescitypress.com

Iowa state Treasurer Michael Fitzgerald has a simple message for any family with a member who might want to go to college someday — use the state’s 529 plan and start saving early.

Fitzgerald stopped by the Press office recently to advocate for the advantages of the Iowa college savings plan, and answered questions on some other issues as well, including his reaction to the state’s budget and additional tax cuts passed this last session of the Legislature.

A 529 plan allows family members — or pretty much anyone — to contribute to an account to save money for a specific person’s college expenses. The contributions can be used as a deduction on state income tax returns up to a set amount, currently $3,319 per year per beneficiary.

The money can be taken out of the account tax-free to pay college expenses such as tuition, books, computers, supplies and certain room and board costs at any eligible college, university, community college or accredited technical training school in the United States or abroad, Fitzgerald said.

“It only takes $25 to open an account, and anyone — parents, grandparents, friends and relatives — can invest in College Savings Iowa on behalf of a child,” Fitzgerald said. One-third of accounts are owned by grandparents.

There are 350 people with Iowa 529 accounts in Floyd County, he said, but many more people who could be taking advantage of it. The biggest reason people don’t use it is they are unaware it’s available.

Fitzgerald said studies show that a young person with a college savings account established for him or her is six times more likely to go to college than someone without an account.

“It’s easy to set up and the account is professionally invested,” he said. “There are so many scams out there, but this is a state-run program. I put my name on it.”

Fitzgerald said anyone who goes to the CollegeSavingsIowa.com website, watches a three-minute video and registers, can become eligible for a drawing for a College Savings Iowa account with $529 in it to start it off.

May 29 (5/29) is national 529 College Savings Day, he said, and is used to draw attention to the benefits of the 529 accounts.

“Families who begin putting away money early can make their college savings add up to a significant amount,” he said. “We know our current account owners are our biggest proponents, so we encourage them to sit down with their friends and family and talk about the benefits College Savings Iowa can provide to everyone.”

Fitzgerald also commented on the recently concluded session of the Legislature, which passed a tax cut of about $400 million scheduled to go into effect next year, or a total of about $2.2 billion over six years.

“It’s irresponsible and reckless,” Fitzgerald said. “The state had a $927 million surplus two years ago,” but now that is gone, he said.

Fitzgerald said the “backfill” — the amount the state promised to pay cities and counties to make up for revenue lost because of property tax cuts — is in jeopardy, and some legislators have made it clear its time is limited.

Losing the backfill will mean cities and counties will have to cut programs or raise property tax rates, or both, he said.

“We’re in a mess,” he said. “They literally don’t know what they’re doing,” the Democratic state executive said about the Republican-controlled Iowa House and Senate.

Iowa is short about 100 state troopers, and the chief justice of the Iowa Supreme Court warned that as many as 30 courthouses might have to be closed if funding for the judiciary continues to fall short.

“We have great public schools, but if you starve them they’ll get worse,” he said.

With changes to collective bargaining for public employees, cuts to funding for the regents universities and what he called irresponsible budget cuts, Fitzgerald said voters have a clear choice.

“If they vote Republican again this year, that’s an endorsement of those policies,” he said.