Digital 529 Payments Drive Ascensus Accounts Past $1B

Ascensus announced its 529 education savings plan participants have paid more than $1.1 billion in tuition payments directly to schools in 2023 through the company’s digital payments platform.

Peg Creonte, president of government savings at Ascensus, forecasts that higher education expense payments on the platform will surge even more in 2024. “I absolutely could see it going over $2 billion,” she says.

Part of the payment program’s success, she says, is more direct payments than in the past. When having to pay by check or by more laborious processes, users might not have utilized their 529s as efficiently or with proper timing, according to Ascensus.

“We’ve set up two ways for families to directly pay schools through their 529 plans without having to use a cheque or having money go into their account and then having to move it between accounts,” Creonte says.

One method of payment is for a bursaries office to allow for a family’s payment to be “pulled” from their 529 account. Ascensus’ other more recent innovation is an integration with a company called Flywire, which has built “rails” into hundreds of schools across the country.

“We’ve built the capability for account owners when they’re in their 529 account to use Flywire,” says Creonte. “They select the university that they want to send the funds to. It goes directly from their 529 account to the school. They get notified by text messages if they opt into that along the way, and again, it eliminates the need to either use a check or use intermediary accounts to pay.”

Individuals can enroll in a 529 plan either directly or through an adviser. The 529 direct plans are a larger segment of the educational savings plans market, but the solutions above apply to both adviser plans and direct sell plans, says Creonte. Use of the company’s direct-to-school payments capability is up 140% year-over-year through September.

“It’s a new capability,” she says. “We launched early last year, and we saw some uptake. As more 529 account owners became aware of how easy it would be to pay their bills, we’re seeing just increased usage in the tool. It’s really an awareness thing.”

Ascensus offers a free mobile app dedicated to 529 accounts, READYSAVE 529, and the firm intends to roll out automated payments in 2024. The mobile app launched in early 2021 and now has 360,000 registered users and more than 10,000 App Store reviews. Creonte says account owners who download the mobile app and use it are more engaged with Ascensus’ program and tend to increase their contributions.

Ascensus now serves nearly 7 million accountholders through the 43 different 529 education savings plan state programs it administers. According to ISS Market Intelligence’s 529 Quarterly Data Update for the year’s second quarter, an estimated 16.2 million 529 education savings accounts are currently active in 93 state-sponsored programs, putting more than 40% of the market on Ascensus platforms.

Creonte believes one of the top challenges to providing 529 plans remains a lack of awareness.

“Families are very busy, and families with young children are exceedingly busy,” says Creonte. “It has an esoteric name: a 529 plan. What we see is that many people who could and should be saving for education aren’t even aware of what all the benefits of a 529, so that’s something that we continuously work on.”