About SoarMA

August 9, 2016

SoarMA is a two-year pilot program created pursuant to Chapter 133 of the Acts of 2016.  It is a universal, seed-funded savings account program, designed to help low-income Massachusetts children and families save for postsecondary education and training. The initiative, funded through public-private partnerships, provides a matched savings program and a financial education curriculum. The Massachusetts State Treasurer, the Massachusetts Educational Financing Authority, and Inversant, Inc. have partnered to make the SoarMA program available to eligible 7th grade students in five pilot communities.

The SoarMA program’s pilot communities are the “Round II” Massachusetts participants in the Federal Reserve’s Working Cities Challenge grant program. Those cities include Haverhill, Lowell, Pittsfield, Springfield, and Worcester.  A middle school from each of these cities has been selected and each 7th grade student enrolled in one of these schools during the 2017-2018 school year will be eligible to participate in SoarMA. 

Every account offered through SoarMA is a “529 plan,” a tax-advantaged investment plan authorized by Section 529 of the Internal Revenue Code and designed to encourage savings for higher education. These accounts are offered through MEFA’s U.Fund, which is sponsored by the Commonwealth of Massachusetts and managed by Fidelity Investments. The SoarMA program provides eligible 7th grade students with a $50 seed deposit to help jump start families on savings for future success.  Additionally, the program will match up to an additional $400 of savings provided by others into the student’s U.Fund account for up to a year after the student’s account is opened. Earnings in the account grow tax-free, and qualified withdrawals are not subject to federal and state income taxes.

There are many ways to save money for college. Regardless of how you do so, putting aside money early and often is a great way to help your child pay for college costs. If you start setting aside $50 a month while your child is in kindergarten, your money may grow because of the interest you earn on your savings.

For example:

If your U.Fund account earns a 7% average annual return, and you save $50 per month, you may have over $12,000 in the account when your child goes to college. Even if you can only save $15 or $25 per month, the money in the account will grow because of the interest you earn.1

This hypothetical example illustrates the future value of different regular monthly investments for different periods of time, and assumes an annual effective investment return of 7%. This hypothetical example does not reflect actual investments or any taxes, inflation, fees, or expenses. If they had been considered, performance would have been lower. These hypothetical examples are not intended to predict or project investment results. Periodic investment plans do not ensure a profit and do not protect against a loss in a declining market.[/footnote]

Additionally, research shows that establishing a college savings account may make a child up to 7 times more likely to attend college.2

 

Eligibility

The program will be opened to all eligible seventh graders enrolled in the following middle schools starting in the 2017-2018 school year:

  • Haverhill: Consentino Middle School
  • Lowell: Stoklosa Middle School
  • Pittsfield: Reid Middle School
  • Springfield: South End Middle School
  • Worcester: Worcester East Middle School

To be eligible to open a 529 account, both the adult account owner and the child beneficiary must have a Social Security Number or Tax Identification Number.

Frequently Asked Questions

How were these communities chosen for the SoarMA pilot program?

The SoarMA program’s pilot communities are the “Round II” Massachusetts participants in the Federal Reserve’s Working Cities Challenge grant program. Those cities include Haverhill, Lowell, Pittsfield, Springfield, and Worcester.

What is a 529 college savings account?

A 529 college savings account is a tax-advantaged account specifically designed to help families save for college through professionally managed portfolios of mutual funds.

  • Funds in the account can be used to pay for a variety of higher education and accredited vocational and technical training expenses, including tuition, fees, room and board (subject to certain restrictions), books, supplies, and computer equipment.
  • Earnings in an account grow tax deferred.
  • Qualified withdrawals are not subject to federal or state income taxes.
  • Additional contributions can be made until the account and any other U.Fund account established for the same beneficiary has a balance of $400,000.
  • There are no annual account maintenance fees. Refer to the U.Fund Fact Kit for investment fee information

How will the initial $50 seed deposits and subsequent matching deposits be funded?

All seed and matching deposits will be provided by the Economic Empowerment Trust Fund (“EETF”), which is administered by the Massachusetts Treasurer’s Office of Economic Empowerment.  The Hildreth Stewart Charitable Foundation (“HSCF”) has generously pledged to provide sufficient funding to the EETF to ensure that all eligible 7th grade students receive seed and match deposits into their U.Fund account.

The $50 seed deposits will be transferred into the student’s U.Fund account after the Massachusetts Department of Elementary and Secondary Education confirms the student’s 7th grade enrollment in an eligible middle school.

The matching deposits will be provided in increments of $100 and will be transferred into the student’s U.Fund account approximately one year after the U.Fund account is opened.

Why does the SoarMA program focus on seventh-grade students?

Research shows that putting aside money early and often is a great way to build your savings and help your child pay for college. Every dollar saved today will help strengthen your child’s aspirations for higher education, and even small dollar contributions make a difference. Studies show that children with $500 or less saved for college are 3 times more likely to attend college, and 4 times more likely to graduate.*

*Assets and Education Initiative. (2013). Building Expectations, Delivering Results: Asset-Based Financial Aid and the Future of Higher Education. In W. Elliott (Ed.), Biannual report on the assets and education field. Lawrence, KS: Assets and Education Initiative (AEDI).

After opening a 529 account, how do I start building my savings?

Families should aim to contribute to their 529 college savings account on a monthly basis.

Here are some ideas to help your savings grow:

  • Set up a monthly direct deposit into your 529 account, either through your employer’s payroll or your bank account.
  • Save a percentage of your tax refund each year for your 529 account.
  • Encourage your children to actively participate in saving.
  • Ask family and friends to contribute to your 529 college savings account on holidays and birthdays.

Please note that while the SoarMA seed and matching deposits are provided by the Economic Empowerment Trust Fund, any additional funds deposited into the account are investments of the account owner and are subject to various risks. Before making any such investments, you should carefully review the U.Fund College Investing Plan Fact Kit, which contains important information that should be considered in connection with any investment in the U.Fund College Investing Plan.

How will the SoarMA program provide free education about planning for college for my family?

Every account established through the SoarMA program comes with the following benefits:

  • Inversant, Inc. will host workshops are each middle school to engage families in the college savings and planning process.
  • Direct access to additional tools and information through MEFA.

More About the Program Partners

The SoarMA program is implemented by the Massachusetts Treasurer’s Office of Economic Empowerment (“OEE”) . OEE, the Economic Empowerment Trust Fund, the Hildreth Stewart Charitable Foundation, Inversant, Inc, and the Massachusetts Educational Financing Authority have collaborated in a public-private partnership to bring the SoarMA program to eligible 7th grade students in the Commonwealth of Massachusetts.

All seed and matching deposits will be provided by the Economic Empowerment Trust Fund (“EETF”), which is administered by the Massachusetts Treasurer’s Office of Economic Empowerment (“OEE”).  The Hildreth Stewart Charitable Foundation (“HSCF”) has generously pledged to provide sufficient funding to the EETF to ensure that all eligible 7th grade students receive seed and match deposits into their U.Fund account.

OEE administers the EETF in consultation with its board of directors.  The EETF was created pursuant to M.G.L c. 10, § 35QQ and is a recognized 501(c)(3) tax-exempt nonprofit organization.  The EETF is tasked with encouraging and facilitating economic empowerment throughout the Commonwealth by, among other things, establishing financial literacy programs and creating college savings accounts.  OEE implements the programmatic goals of the EETF.

The Office of Economic Empowerment has partnered with Inversant, Inc.—a national leader in college access. Inversant, Inc. has successfully created a parental engagement model that focuses on giving low-to-moderate income families the resources they need to achieve their goals for higher education. Inversant, Inc. will provide it’s Learning Circle workshops to each participating middle school to engage eligible families in a year-long financial education program and coaches parents on an array of topics relating to college accessibility, including the application process and institution options and costs.

The Massachusetts Educational Financing Authority (MEFA) is a not-for-profit self-financing state authority that works to make higher education more accessible and affordable for students and families in Massachusetts.  The Massachusetts state legislature created MEFA in 1982 at the request of colleges and universities across the state.  MEFA is the Massachusetts authority on planning, saving, and paying for college.  Its integrated college planning program reaches across Massachusetts.  MEFA strives to increase awareness of financial aid opportunities and to help make college more affordable through informative live seminars on a range of topics related to higher education, comprehensive online resources that make it easy to get assistance and collaboration with college counselors and higher education professionals designed to improve its services to students and families.

SoarMA is in partnership with: