ELLY GRIMM
• Leader & Times
Families looking to start saving money for their children’s future education needs now have some changes to look forward to.
As Kansas Treasurer Steven Johnson tells it, this work has been going on for a while.
“We are excited to announce a new chapter for the Kansas 529 postsecondary education savings program, including a new program manager, a refreshed identity, and significant enhancements designed to deliver greater value for Kansas families. Following a competitive procurement process, the treasurer selected TIAA-CREF Tuition Financing, Inc. (TFI) as the new plan manager for the Learning Quest 529 Education Savings Program,” Johnson said. “Partnering with TFI positions the program to deliver a best-in-class experience for account holders. Kansas’ 529 plans, including Learning Quest and the Schwab 529 Plan, together serve more than 228,000 families and represent approximately $14.5 billion in assets under management. Under new program management, the Kansas 529 plans will be positioned as one of the lowest-cost 529 plans in the market. Kansas 529 account owners will experience a significant fee reduction that will collectively save millions of dollars, keeping more of their contributions working for future education expenses. The transition also brings streamlined investment options, including a shift to enrollment-year portfolios that better align savings with a student’s expected education timeline. Account owners will benefit from a modernized website, improved digital tools, and a more user-friendly account management experience when the new program launches March 2.”
Johnson said there were many factors to take into account with this work.
“At the state level, every contract comes up for bid on some schedule. This one is one of the longer schedules between as you'd want it to be, and you did not want to be changing providers regularly,” Johnson said. “We received a number of really competitive bids with groups that had other ideas, and there were some aspects we ultimately didn't choose, but they were innovative but exciting, and we ended up going with what we thought was the best package for account owners going forward in terms of having a great plan today and what things will look like for the account owners in the state in 20 years, and what will it look like if we take these different roads? 2025 is when the contract was up for bid, and prior to that, we let folks know what was going on, and we started getting inquiries from other firms asking if we were going to take bids. And then it was in August of 2025 when everything went out for bid, and those were back in by December. We started the process in January of last year to work through all the details of what direction we were going, and then once we had made that decision, we had communicated everything in March of last year and we started working to get all the contracts final. The contract was active through July of 2025, so we've been in the transition, operating under a contract extension with American Accenture century the current provider, and then we'll actually transition in March to the new provider.”
Johnson added there will be many benefits to these updates.
“On the account owner side, the change in costs is significant in terms of the average portfolio, and again, averages are challenging to be specific to every situation. The calculation of the average of all the portfolios we had were just below what the industry was. We were at 42 basis points – the industry was at 49 and we will now be at eight basis points, so at the current time, we're the lowest cost plan that will be offered,” Johnson said. “But I'm sure as soon as someone sees that, somebody will want to become the lowest cost and figure out how to shave off a half of a basis point on the basis point. For those who might not be aware, 1 percent is 100 basis points. A basis point is 1/100 of 1 percent so, so it is a very cost-effective way for people over time to invest the second piece that was attractive to us in the bid. We had a lot of different offerings, which was great if you really knew what you wanted, but was confusing if you didn't. We wanted to simplify that process in terms of where we saw people give up on opening an account because they had to make a portfolio decision. We wanted to default and say 'Here's the track, if you just want to tell us when your child or beneficiary will start their year of enrollment, we will do a prudent job of managing risk to that date.'”
And the benefits will not end there, Johnson continued.
“With the provider we selected, both our current provider and the new provider use a company called to help make it more seamless a transition for an account owner so they will be able to log in the day we change to the new provider with the same username and password,” Johnson said. “The portfolio behind will change – if you're in 80 percent equities, your new portfolio will have that same equity exposure, so we're keeping folks in that same type of a portfolio. Again, the fees will be lower, and it is an indexed based, rather than actively managed portfolio, which is what accounts for the difference in fees and and we'll continue to manage that over time, so we may not stay wet to that strategy. One of the things we had also asked for, from a management standpoint on the 529, their number one thing for a provider was open architecture, which simply means we can choose any fund we want to put In the portfolio for the account owners, and we're not restricted to a set or a requirement to be managed by a particular provider, we want the universe to be available.”
Part of the work will also include increased outreach to people.
“The schools are great to work with. Their agenda is so full, so if we can find a way that fits that adds value to them, that is great. As these outreach consultants come on board and we have the chance to work with them, our goal is to set our plan with them,” Johnson said. “We want to figure out how are we going to most effectively cover the state and the schools are a great partner, and we also want to catch folks as soon as we can out of the gate, even before school starts, because if you're lucky enough to start before 5 years old, you have so much more time for your money to grow and compound and put more dollars in. One of the other things we have going with the legislature at the moment to help with our outreach consultants is a proposal of other separate accounts. We want to make people aware of all of the different choices, and we are asking the legislature if we can communicate with the data the Department of Vital Statistics has on newborns, and maybe we follow up a year later. We want to, at some point early on say, get in touch with those parents and say 'Hey, here's all of this information, how do we best support you in taking advantage of the accounts that are available?' That's one of the ideas we've had to try and help people grab the most value they can from any of these accounts with the time they have available.”
With the news still being rather recent, Johnson said he and his staff are ready to help with any questions.
“We know change is always hard, and we want to make things as easy for people to work through, that's certainly our goal. We look forward to other thoughts that people have either to me directly or there are treasurer's advisory committee that considers all of those of what people want, but mostly we want there to be that awareness the plan existing and how it is a great tool to save for education,” Johnson said. “Educational needs are so broad, the ability to change beneficiaries gives a lot of flexibility and how to use it, and the most important thing is to start early and do things little by little as time goes by and give yourself more options in the future. Financial literacy in general, is something our office is really excited about working with people on to use tools and just better prepare financially for the future. We think we've assembled a tool that is world class to be able to use if the five to nine is the right tool for someone to use.”
