The Basic Steps to Creating a 529 Pilot Program for Your Scholarship Recipients
As you consider incorporating 529 plans into your scholarship program, it's helpful to have a clear roadmap. These steps outline the process to guide your organization in setting up a pilot program that awards scholarships dollars through 529s. It’ll help you ensure a smooth transition and maximize the benefits for both your program and the students you serve.
Determine your "Why?"
Before diving into the mechanics of 529 plans, it's crucial to define the core purpose of your scholarship program. What are the overarching goals you aim to achieve? Who are the students you envision supporting, and what unique characteristics define your ideal recipients? Why is implementing an effective and streamlined awarding process paramount to achieving your organizational objectives? Consider what an ideal scholarship awarding process would look like from both your organization's and the students' perspectives.
Decide between organization- or student-owned accounts.
A pivotal decision involves determining the ownership structure of the 529 accounts. Organization-owned accounts generally offer more control and greater transparency for your program, and can often simplify the process for students. However, student-owned accounts can significantly reduce your oversight burden, while simultaneously empowering students with increased information, responsibility, and freedom in managing their educational funds. What level of control and administrative responsibility best aligns with your organization's philosophy and resources?
Determine your wants and needs in program design.
With your "why" established and ownership decided, consider the specific parameters of your scholarship awards. What information tracking and reporting functionalities are essential for your organization? What does ideal integration with your existing administrative tools and processes look like? What would make for an outstanding user experience, for both your team and your students? What educational resources and training will your staff and students need to effectively utilize the 529 plans?
Interview and select among 529 plan providers.
Once you have a clear understanding of your program design, begin the process of interviewing and selecting 529 plan providers. Seek out providers who demonstrate a comprehensive understanding of your organization's intentions and goals. Be very clear about your “why” and your ideal program design, and ask all your questions! Ultimately, your aim is to partner with a provider who can effectively deliver on your specific needs and requirements. Remember, you have the flexibility to work with any 529 plan provider, not solely the one offered by your state.
Work with your new 529 plan provider partner to establish accounts.
After selecting your 529 plan provider, collaborate closely with them to establish the accounts. The account structure you chose—whether organization-owned or student-owned—will dictate the setup process. For instance, you might set up organizational master accounts with individual student beneficiary accounts, or you may simply establish organizational accounts and guide students on how to set up their own.
Adjust your existing processes.
Review your current operational processes and identify any areas that may need adjustment. Will you need to collect new information from students or modify existing forms? If so, update all relevant documentation. Should any timelines need to be adjusted (either moved forward or backward), make those changes and communicate them clearly to all pertinent stakeholders, especially your scholarship recipients.
Train your staff and students.
Effective implementation of 529 plans necessitates comprehensive training for both your staff and your students. Determine who will be responsible for delivering this training: your internal team, your 529 plan provider, or a combination of both? Assess what training materials already exist and what new resources need to be developed to ensure everyone involved is fully informed about this new approach and their respective roles.
While this blog post provides a foundational understanding, setting up and managing 529 plans for scholarship programs involves nuanced considerations. We offer in-depth support and tailored guidance to help organizations navigate these complexities, ensuring a seamless and effective integration. To discuss how we can partner with your organization to maximize the impact of your scholarship program through 529 plans, schedule a consultation with us today.
