Kansas Overhauls Education Savings Program: Lower Fees, More Choices Arrive in March
TOPEKA — Kansas families saving for college and career training are about to see tangible benefits from a major shake-up in the state's education savings program. State Treasurer Steven Johnson announced that the Learning Quest 529 Education Savings Program will transition to a new manager in March, bringing with it a suite of improvements aimed at making higher education more affordable and accessible.
The state selected TIAA-CREF Tuition Financing Inc. to take over management after a competitive bidding process involving five proposals. Johnson emphasized that the change was driven by a commitment to enhance value for the program's more than 228,000 account holders, who collectively have $14.5 billion in assets under management.
"Our north star is keeping costs low and returns competitive for Kansas families," Johnson stated. "This transition isn't just about a new name on the door; it's about delivering better tools, more intuitive investment paths, and keeping more money in savers' accounts." The average portfolio fee, already among the nation's lowest at 0.08%, is expected to drop further.
A key new feature addresses a common hurdle for savers: investment selection. An automated, professionally managed portfolio option will allow participants to delegate asset allocation decisions. Johnson noted this could prevent potential savers from abandoning the setup process.
The tax advantages remain a cornerstone. Contributions grow tax-deferred, and withdrawals for qualified education expenses—including college, technical school, and apprenticeships—are tax-free. Kansas also offers an annual state income tax deduction of up to $3,000 per person, per beneficiary.
Broader Impact & The ABLE Program
Beyond the traditional 529, Johnson highlighted the state's parallel 529 ABLE program, which serves Kansans with disabilities. For about a decade, this plan has allowed individuals to save without jeopardizing eligibility for critical federal benefits like Supplemental Security Income (SSI).
"For someone relying on SSI with a $2,000 asset limit, an ABLE account is a financial lifeline," Johnson explained. Funds can be used for disability-related expenses like housing, transportation, and healthcare. Despite its value, only about 3,000 such accounts exist—a number Johnson is actively working to double through partnerships with agencies like the Department for Children and Families.
In a related initiative, the Treasurer's Office now automatically establishes 529 accounts for foster children receiving federal benefits, pairing the accounts with financial literacy education.
Voices from the Community
David Chen, a financial advisor from Overland Park: "Lower fees and simplified investing are a win for every family. The auto-portfolio option is a smart move—it removes behavioral barriers and helps people stay invested for the long term."
Maria Rodriguez, a parent from Wichita with two teenagers: "Hearing about lower costs is a relief. Every dollar saved on fees is a dollar that goes toward my kids' future. The updated cost calculators will also help us plan more realistically."
Prof. Alan Finch, Economics Department, University of Kansas: "While the operational improvements are positive, this is a missed opportunity for structural reform. The state's tax deduction primarily benefits higher-income families who can afford to save. Where's the push for matching grants or seed deposits for low-income households to truly democratize access?"
Sarah Jenkins, a disability advocate from Lawrence: "The focus on expanding the ABLE program is crucial and overdue. For the disability community, this isn't just a savings account—it's a tool for empowerment and independence. I hope the outreach is aggressive and inclusive."