Futurist Forecasts Possible Scenarios for 529 College Savings Plans to 2017

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"The use of 529 college savings plans will likely grow in the coming decade as more people become aware of benefits and confidence grows in their permanence," futurist Tom Conger, founder of Social Technologies, tells the audience at the annual College Savings Foundation conference.

Futurist Tom Conger, founder of the international research and consulting firm Social Technologies, was the keynote speaker at this year's College Savings Foundation conference at the Miami Beach Resort and Spa.

His mission: To offer provocative scenarios that would help participants consider the possibilities of 529 plans, a program under the Internal Revenue tax code that gives parents two options to save for their children's college education: pre-paid tuition plans and college savings plans. All 50 states, plus the District of Columbia, currently sponsor at least one type of 529 plan.

"A goal of our conference is to provide thought leadership to our members. Tom Conger led us through a thought-provoking exploration of the economic, demographic, regulatory and political dynamics that could shape the future of 529 college savings plans," said Peter Mazareas, College Savings Foundation Treasurer and chair of the conference, Yesterday, Today and Tomorrow: Optimistic about the Future of 529s.

To that end, Conger forecasted eight possible futures for 529 funds in hopes of getting conference participants to consider the strengths, weaknesses, opportunities and threats for their industry through 2017.

Consider this
"The popularity of the 529 plan has been growing in recent years as the public has become more aware of their desirability as a savings vehicle," Conger explained to participants, pointing to data from the Investment Company Institute that shows assets held in 529 college savings plans grew from $200,000 in 1998 to $68.7 billion at the end of 2005.

He then encouraged attendees to consider scenarios for their industry, including the following three possibilities. [See sidebar for a list of all eight provocative forecasts.]

Trend: Education will continue to "internationalize."
Scenario: The global flow of people, ideas and influences will rise dramatically in the next five to 10 years. As a result, the national boundaries that currently separate students and learning institutions will become increasingly blurred over the next decade.
Question: How will the 529 industry adjust?
Possible outcomes:

  • Overseas schools will start competing for U.S. students.
  • More 529 funds may be used to pay for education expenses outside of the U.S.
  • Many students will have extended families living abroad that wish to contribute to a child's education. As a result, the possibility exists that Congress may change the current rules and permit citizens of other countries to contribute.

Trend: The educational gender disparity will increase.
Scenario: College education could become an increasingly a female endeavor, creating new campus controversies and public debate about the growing gender gap. Already in 2007, the disparity is apparent between the number of men and women on college campuses.
Question: What would the industry do if, in 10 years time, nearly two-thirds of all college students were female?

Possible outcomes:

  • Parental savings rates could differ for male and female children.
  • The widening gender disparity could further erode pure merit-based standards for college admission. Admissions officers could institute "affirmative action" policies for male college students in the next decade,
  • The future marketing of 529 plans to working class families might emphasize the the account can pay for technical and trade school, especially for male beneficiaries.

Trend: Virtual education may become the standard by 2017.
Scenario: Little, if any, money will be spent on textbooks as we know them today. Students will practice for the SATs on their mobile phones, and instructors will send videos to students' personal mobile devices to augment class lectures.
Question: How will the 529 industry adapt?

Possible outcomes:

  • Students who are engaging in some form of virtual education will spend 529 funds will likely be spent on computers and Internet access.
  • As the area of 'serious games' takes off, 529 funds could be used to pay for educational video games.

The bottom line
Although the scenarios are speculative, Conger suggested that 529 plans will remain a powerful tool when it comes to saving and paying for college --- "but as the years pass the plans will need to remain flexible in terms of what the money can be used for and on top of the latest trends in education."

He concluded that although today it may be books and tuition that 529 funds pay for, "in 10 years time the money will also likely go to pay for a virtual education delivered wirelessly to your personal device or educational 'games' and simulations."

Sidebar: Provocative forecasts at a glance
Tom Conger's eight possible scenarios for 529 funds through 2017

Scenario 1: Awareness and participation will grow. As people become aware of the plan benefits, and as confidence grows in their permanence, 529 plans will likely move from an underutilized savings instrument to something all major employers will eventually offer as a standard benefit to employees.

Scenario 2: Education will continue to internationalize. The global flow of people, ideas and influences will continue to rise around the world, and in the next decade the national boundaries that currently separate students and learning institutions will become increasingly blurred.

Scenario 3: Plan fluidity will increase. New financial instruments for investors will expand out of equity markets into retirement funds --- then into 529 education accounts. As a result, 529s will likely face growing demands to expand their availability and increase their use of real-time trade for account holders.

Scenario 4: New shifts in savings will occur. Tax-deferred 529 plans could become overshadowed by new U.S. government policies designed to boost savings that expand the preferential tax treatment.

Scenario 5: A new wave of paternalism will arise. The model of the economically rational individual has been thrown into question by research into behavioral economics. As a result, investment products like 529 funds could be used to gently compel investors into making wiser long-term decisions.

Scenario 6: Entitle crunch sets. By 2017, the U.S. federal entitlement spending could reach crisis proportions due to the retirement of boomers. Policymakers could turn to a combination of take hikes and benefit cuts to staunch the flow of red ink. As a result, 529 plans would face new contribution limits, taxes on withdrawals and the elimination of state tax deductibility.

Forecast 7: Title XY dominates. In the next decade, it is likely that nearly two-thirds of enrolled college students will be female --- leading to the possibility of "affirmative action" admissions policies for male students. Due to this shift, 529 funds could be used to pay for technical and trade school.

Scenario 8: Virtual education may become the standard. By 2017, more than half of all 529 money spend could be used for educational activities that have a virtual/online component. For instance, students could be taking their SATs on their mobile phones and 529 funds could be used to pay for video games.

About Tom Conger
Tom Conger is a consulting futurist and the founder of Social Technologies. A generalist by choice, his ongoing research and consulting activities span business, science, technology, culture, politics, demographics, the economy, and the environment. Tom's breadth of knowledge is reflected in the clients he serves, which range from Fortune 100 companies to domestic and international government agencies to professional associations. Recent clients include Nokia, the National Association of Home Builders (NAHB), the government of Finland, and MTV.

As a consultant, Tom is known particularly for his skillful facilitation work as well as for process and system design, including pioneering work in immersive futures and in multimedia tool development. Most recently, he has focused on developing new approaches for synthesizing, applying, and communicating futures knowledge and on embedding systemic, proactive thinking into companies' everyday business processes. His expertise also encompasses strategic conversations, technology assessment, scenario development, and trend interpretation.

Tom is a graduate of the MS program in Studies of the Future at the University of Houston--Clear Lake and was a founding board member of the Association of Professional Futurists. Before starting Social Technologies in 1999, he worked with leading futurist firms including Coates & Jarratt and the Institute for Alternative Futures.

About Social Technologies
Social Technologies is an international research and consulting firm specializing in the integration of foresight, strategy and innovation. Headquartered in Washington, D.C., Social Technologies has offices in London and Shanghai, and a client list that includes Global 1000 corporations, government agencies, and major nonprofits --- as well as a global network of analysts and consultants. The firm is recognized for its unique perspectives and approaches, which combine rigor with creativity, knowledge with action, and technology with culture. For more information: log onto http://www.socialtechnologies.com, and the blog: changewaves.socialtechnologies.com.

About the College Savings Foundation
CSF is a Washington, D.C.-based not-for-profit organization with the mission of helping American families achieve their education savings goals by working with public policy makers, media representatives and financial services industry executives in support of education savings programs.

A primary focus of CSF is building public awareness of and providing public policy support for 529 plans, an increasingly vital college-savings vehicle. CSF members include firms that offer 529 college savings programs and/or participate in those programs as investment managers; associate members include law firms, accounting and consulting firms, governmental and non-profit agencies and individuals who support CSF and its mission.

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