Access and Affordability

Americans understand the value of a college education and have continued to prepare financially for the costs of post-secondary schooling even as the economy has slowed. Almost every state in the South offers parents an opportunity to save for college through Section 529 programs, tax-preferred accounts named after the section of the tax code created by the IRS to authorize their special treatment under federal law. These programs take the form of prepaid tuition plans which allow participants to “lock in” current tuition at state schools college savings plans structured investments designed to realize gains in excess of tuition increases under normal circumstances.

In recent years, both types of Section 529 plans have faltered, due to a poor investment climate and rising tuition. When most programs were instituted, there was an unfailing optimism in the potential for the stock market to continue to expand and create returns that would outstrip any increase in tuition which historically ranged below 5 percent, making the extension of this state guarantee a risk of a presumably remote nature. As tuition skyrocketed and the stock market failed, however, states have been forced to reconsider the guarantee extended to prepaid tuition plans, and college savings plans are not keeping up with rising costs. This SLC Regional Resource offers a look at recent trends and events on state section 529 plans within the SLC member states.  

Higher education across the country continues to struggle with state funding cuts, aging facilities, increasing tuition rates and a rapidly increasing student population. An annual survey of community college directors conducted by the Education Policy Center shows  educators are worried if these trends continue, higher education may be out of reach for many Americans.

Some may think it’s a gamble, but so far it’s paid off. The new Arkansas Scholarship Lottery is funding college scholarships by the thousands, more than the state was ever able to afford without it. As the recession continues, record numbers of students just out of high school and nontraditional, adult students took the state up on its offer of free tuition and fees. The state received 53,000 applications this year for the college scholarships, compared to 7,000 in 2009.

Community colleges are experiencing record student enrollment while states are cutting their budgets due to large deficits. Enrollment caps are limiting people's access to higher education.

THEREFORE BE IT RESOLVED, that The Council of State Governments opposes any effort to remove or transfer oversight and regulation of the 529 college savings plans from the Municipal Securities Rulemaking Board to any other federal entity, including any organization that might be established to provide oversight and regulation of consumer credit.

Historically, K-12 and higher education programs have operated independently, with little connection between them. P-16/20 models are a policy option to provide continuity from one level of education to the next.


Advanced Placement programs enable students to earn college credit while enrolled in high school, thus creating a new pathway to higher education. However, AP courses are not universally available to students.

Suggested State Legislation: This Act addresses conflicts of interest between colleges and representatives of financial entities which lend money to students to attend college. For example, under the Act, a lending institution must prohibit an employee or agent of the lending institution from being identified to borrowers or prospective borrowers as a college or university employee. The Act prohibits lending institution employees from staffing the financial aid or financial call center of colleges and universities. The Act also stipulates how colleges and universities list in their financial aid material institutions which offer financial aid.

Suggested State Legislation: This draft bill combines two Michigan laws enacted in 2009. This legislation permits cities, townships, counties, school districts, or intermediate school districts in areas where the percentage of families with children living at or below the Federal poverty rate is higher than the state average to establish “Promise Zones” to provide financial assistance to postsecondary education to students who graduate from a public or nonpublic high school within that zone. The bill requires the governing bodies of such entities to apply to state department of treasury for approval to establish promise zones.

Suggested State Legislation: This Act requires college textbook publishers to make the price, any substantial content revision between the last two editions, copyright dates, and the variety of formats for a text, available upon request, to faculty members or textbook adopters at public higher education institutions when the publisher provides information about their products. The Act distinguishes between supplemental material and integrated textbooks and requires a publisher to make a textbook and supplemental material available separately when selling the materials bundled together.