Iowans bank $6B in 529 college savings plans

"I'm curious how the 529 savings plans are doing now that the ESAs are in full swing for everyone, no matter income,"

Catch up quick: ISave 529 is an investment account allowing families to save for education expenses, with tax-free growth and withdrawals for qualified expenses.

• Iowa's education savings account (ESA) program allocates about $7,600 per year to every K–12 student attending a private school in the state.
• ESAs were initially limited to low-income families when they began in 2023. But starting this month, they are open to anyone regardless of income.

State of play: McCoy wonders if 529 balances have decreased because there's less need to save for K-12, or if people are saving more for college due to the ESAs.

What they're saying: Jacob Holck, spokesperson for Iowa Treasurer Roby Smith, tells Axios the office doesn't track an ESA account owner's reason for saving.

Yes, but: About 98% of qualified withdrawals are being used for some type of postsecondary education.

By the numbers: From January 2023 through April, Iowa saw an increase of over 6,400 ISave 529 accounts.

• There are now about 280,000 active ISave accounts worth a combined $6 billion, Holck said.

Context: Iowa offers a state income tax deduction of up to $5,800 annually per child for 529 contributions.

• That and compounding investment growth continue to make the accounts attractive for long-term planners.

The bottom line: Some Iowans have squirreled away some serious educational cash.