College Savings Iowa’s trust fund nears $5 billion in assets

/wp-content/uploads/2022/11/BR_web_311x311.jpeg

Iowans who are putting money away for their kids’ college educations got a pretty nice bump in their investment returns this past year through the state’s 529 plan. Market gains helped add a net increase of nearly $493 million to the value of the assets in the Iowa Educational Savings Plan Trust in the fiscal year that ended June 30. By comparison, the net increase in assets the previous fiscal year was less than one-tenth that amount — just over $39 million. 

The money is invested by the Iowa Treasurer’s Office across a range of Vanguard funds based on the owners’ choices. The higher returns were “pretty reflective of the market itself,” said Karen Austin, deputy treasurer. “It was up significantly over the previous year, which was good for all of our participants, clearly.” 

Overall, the trust fund’s net position increased by more than $510 million after new contributions, administrative fees and investment income, bringing the fund to a year-end net position of more than $4.96 billion in assets. Between College Savings Iowa accounts held by individuals and Iowa Advisor 529 Plans opened by financial advisers, the trust holds funds for 298,804 college savings accounts. 

Last fiscal year, College Savings Iowa participants added nearly $385.7 million to their beneficiaries’ accounts, and withdrew $369.3 million to pay higher educational expenses, a 13.5 percent increase over the previous year. That increase in withdrawals was mainly the result of an increase in distributions for educational expenses. 

“We anticipate that we’re going to see higher withdrawals as the plan matures,” Austin said, noting that College Savings Iowa is approaching its 20th year. “We think it’s a good thing, because those are the people now taking money out for the college expenses.”  

Each year, the program has had an increase in the number of accounts as new accounts are opened, Austin said. “We still see more accounts being opened than closed.”