Students attending colleges in New Jersey are now eligible for an automatic one-time scholarship worth up to $ 3,000 if their families invest in the the state’s 529 education savings plan under revised rules adopted this week.
the New Jersey Better Educational Trust Scholarship, known as NJBEST, previously ranged from $ 500 to $ 1,500 for students whose families opened college savings accounts in their name. Under the new rules, one-time scholarships are increased to a minimum of $ 1,000 and a maximum of $ 3,000 per student.
“By doubling the value of the NJBEST scholarships, we have increased the incentive for students to attend a post-secondary institution in Garden State. The increase in scholarship amounts will begin in the fall semester of 2021, ”said David Socolow, executive director of the Higher Education Student Assistance Authority, which oversees the program..
Each state has a 529 plan, which is named after the section of the federal tax code that allows families to invest money in special accounts to save for a child’s college education. Families can invest in any state’s plan, although some states offer incentives for residents to participate in their local plan.
the NJBEST map, which began in 1997 under the administration of Gov. Christie Whitman, has been criticized for having high fees and not giving families the tax breaks and other perks that other states offer residents to invest in their 529 plans.
Last year, financial analysts at Morningstar ranked New Jersey’s 529 plan as one of the nation’s worst, which gives it a negative rating, due to high fees and a few advantages over other state plans. Illinois, Michigan, and Utah plans rank among the nation’s 529 best plans.
However, NJBEST does guarantee scholarships if students choose to use the money saved in their 529 plan to attend a public or private college in New Jersey. The state hired investment firm Franklin Templeton in 2003 to replace the state treasurer as the plan administrator, and it has also cut fees in recent years to make the plan a better investment.
Students are eligible for scholarships if their NJBEST 529 account has been open for at least four years and has made contributions of at least $ 1,200. The amount of the one-time scholarship starts at $ 1,000 and increases to a maximum of $ 3,000 depending on the length of time the account is opened and the amount of contributions.
To be eligible for the full $ 3,000 scholarship, students must have a NJBEST account open for at least 12 years and has at least $ 3,600 in invested contributions, according to new regulations approved by the board of the state’s Higher Education Student Aid Authority.
The scholarships are not available to students who have chosen to attend out-of-state colleges.
NJBEST accounts can be opened from the birth of a child with a minimum contribution of $ 25. The money, which is invested by the administrators of the plan, can eventually be used for two- or four-year colleges, vocational schools, and for certified apprenticeships and tuition fees at some K-12 schools.
Last year, more than 500 students received NJBEST scholarships as they began their studies in New Jersey and began cashing in their 529 savings, state officials said. There are over 50,000 New Jersey families investing in the plan.
Unlike other state scholarships, NJBEST scholarships are not taxpayer funded. The exchanges are funded by fees that investors pay to maintain the 529 accounts, officials said.
The changes to the value of NJBEST scholarships come as the state also promulgates new rules expanding who is eligible for the scholarship. Under a law signed by Gov. Phil Murphy last year, scholarships are now available in any term at which a student enrolls at a New Jersey college of higher education, and not just during the first year of a student.
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Kelly Heyboer can be reached at [email protected].