Consumers utilizing the Mississippi Affordable College Savings (MACS) program will soon have the ability to add and utilize a prepaid debit card to pay for qualified higher education expenses. Biancca Ball from WJTV in Jackson, MS adds additional details on Mississippi’s initiative:
“MACS account holders can now enroll and manage their MACS529 Card as an extension of their MACS account. Using a single login, and without having to work through any third-party intermediaries, account holders can view card balances and transaction history, as well as manage plan distributions.”
The ability for account holders to simplify purchase options for qualified incidental items adds a new and simple innovation to ensure use of accounts, as well as simple options to abide by 529 plan policies. The card runs on Mastercard’s debit network, giving nearly ubiquitous access for consumers to make purchases at retail locations and through e-commerce platforms.
Similar to cards utilized for Health Savings and Flexible Spending Accounts that restrict purchases and may require secondary approvals, Mississippi’s 529 plan card program only allows for purchases of specific, qualified expenses. In the case of 529 accounts, users can purchase items such as tuition, textbooks, supplies room and board in higher education settings. Conversely, education related expense for items such as insurance, travel or extracurriculars typically are not covered. Account holders are also tied to cost of attendance limits that are tied to individual school’s and can vary, making tracking acceptable limits difficult. A prepaid card can determine qualified expenses but will likely not be able to be capped based on individual school cost of attendance limits.
Regardless, the Mississippi plan creates a direct tie in to simply the reimbursement process. There are other examples of third-party cards, such as EduFi that can link to a variety of 529 plans and offer similar services. The MACS plan currently has slightly more than 16,000 accounts with total assets under management of $297M according to the National Association of State Treasurers. While the majority of the assets are still long term investments, more utilization of a reloadable prepaid card can only increase the current Javelin prediction of 6% CAGR in the cash access card vertical as outlined in the 2023 Prepaid Card Data Book. Additional 529 plan investment in prepaid programs could easily create a powerful new tool for consumers to more easily access savings while also expanding the functionality of prepaid programs to a new and growing vertical.