Rachel Palumbo - Development Manager - Providence Promise

Kristin Lessard discusses 529 Plan and more with Rachel Palumbo, Development Manager of Providence Promise.

Episode Transcript

(00:00):
It's Kristin Lasard. There was anews story recently about the cost of Ivy
League colleges, many of which nowcost over ninety thousand dollars per year.
It is becoming harder and harder tosave for your child's education, and the
five twenty nine plan was designed tohelp with just that. And here to
help raise awareness about the benefits ofcollege saving plans is Rachel Palumbo, Development

(00:21):
manager of Providence Promise. Hi.Rachel, Hi, how are you good?
Thanks? This is kind of insanethis story about some of these schools,
particularly here in New England, likebu and Toughs all over ninety thousand
dollars a year. Is that crazy? Yeah? Absolutely, We're definitely witnessing
a bit of this college affordability crisisas it's known. Yeah, it's daunting

(00:42):
for parents to hear that, andyou know, how can you plan for
that? You know? The fivetwenty nine tell us tell us how that
can help. So here at ProvidencePromise, we really stressed the idea of
early planning, you know, andthat you're never too early to start to
think about higher education, for yourchildren, to prepare for higher education and

(01:03):
to begin saving. And so weuse the five to nine College Saving Plan
to help provide a pathway for ourfamilies to start to save and plan as
early as possible for their child's future. Yeah, because you never know if
it's ninety thousand some of these schools, Now, what is it going to
be when a child born today turnseighteen? Do you have to start young?

(01:25):
And that's the thing. So withthe five to nine Savings Plan,
you know, you're sort of ableto leverage time to help you save even
more than if you've started savings,say ten to fifteen years in the future.
So we encourage our families to makecontributions monthly within their means, and

(01:45):
then we also provide a one hundreddollars speed deposit into accounts to help get
them started, and then that moneyis invested. You know, different college
savings plans will invest differently, butthe one that we work with gets more
aggressive the older the student gets tohelp try to save as much as possible
before they do graduate from high schooland look to higher education. Now,

(02:08):
different states have different five two nines, correct, that's correct. Yeah,
So how do you kind of wadethrough that and know which one is the
best for you and your family?Yeah, it's a great question. I
would say folks can definitely, youknow, do their research and look into
different plans that are sponsored by statesacross the country. Here at Providence Promise,

(02:32):
we use the College Bound Saber Plan, which is the state sponsored plan
in Rhode Island, and we havea partnership with the General Treasurer's Office that
allows us to partner with them andbe able to also raise some money to
help provide even you know, morefeed deposits and what we call incentives to

(02:53):
students accounts to help them grow theirmoney. Are there fees that go along
with a five two nine? Tomy knowledge, there are no fees at
least with the state sponsor plan thatwe use. Families have the option to
make contributions. It's sort of partof our partnership with families that we ask
them to do that on a monthlybasis, but there truly is no cost

(03:15):
of families. And I think what'sgreat about our partnership with families is that
as they may face certain challenges overtime, we're able to work with them
to pause their contributions and then hopefullywork with them to get them to continue
when they are able to do so. Now these are investments. What kind

(03:36):
of risk is there? Yeah,it all depends on what the market is
doing. I think we've been veryfortunate to see families investments continue to increase
despite certain challenges in the market,especially around COVID nineteen. I think we
did see a little bit of hesitancy. Probably the most was in twenty twenty,

(03:57):
where you know, things that arehappening in the market that that all
gets you know, replicated and reflectedsort of with these investments in five two
nines, and so when folks werestarting to be a little bit more risk
averse, we definitely saw that andfelt that. But again, we've been
so fortunate to retain ninety eight percentof our families since the pandemic, and

(04:19):
we've been able to watch their assetsgrow and support that growth. So you
know, it's, of course,it's always going to be a bit of
a risk. We don't know whatthe market's going to do at any given
time. But I think what youcan do is you can like look historically
over you know, the last severalyears, and make some sort of educated

(04:41):
guess or observation about where you thinkthe market is going to go. When
we project for families what they canexpect to see in their savings accounts.
We tend to use a six percentrate of returns to help show them what
their savings will look like. Andso one figure that we've used recently is
that on average, based on whatthe market is doing, historically, families

(05:04):
who are you know, putting atleast two hundred and fifty a month into
an account, which is actually whatthey can earn monthly from us by participating
in qualifying activities and earning incentives.If they do that and they start by
age ten, that after eight yearsthey will have at least thirty thousand dollars

(05:25):
seat in their college savings account,which will help them pay for you know,
hopefully multiple years of a in statean in state college or university here
in Rhode Island. It is allbased on you know, what you can
expect on average, but hopefully thatgives spoke the figure that they might be

(05:46):
able to use for their own planningand can that money that can money can
be used for college tax free correctcorrect? Yep? And all of that
information is available online. There wererecently some changes to what five to nine
college savings plans can help cover,and so it was recently expanded. There
are now even more things this yearthan there were five years ago that families

(06:10):
can use their five to nine plansfor. Typically folks think of you know,
tuition and fees associated with higher education, but now it will cover things
including you know, communing costs andbooks and different certifications and fees associated with
continuing education degrees and certificates, andso again that's really broadened even so much

(06:33):
that folks can roll it over intoa sibling's account if they decide not to
pursue higher education, or I believenow it can be rolled into a retirement
account, all tax free, andso definitely encourage folks to do their own
research and to check it out.But like I said, these things are
changing, they're expanding, and they'retrying to make it as easy as possible

(06:55):
for people to leverage the complete benefitsof a five to nine college savings plan.
And so to help raise awareness,Providence promise you hold a five twenty
nine day. Tell us about thatwe do. Yeah, So this is
a day that is, as yousaid, hosted in honor of five to
nine plans. It's to raise awarenessof the power of a five to nine

(07:17):
plan as a pathway for families toprepare for and save for higher education.
Our five to nine Day celebrates thesuccesses of our enrolled students and families,
of which there are more than onethousand, two hundred and seventy five students
currently enrolled from over six hundred andseventy local families who collectively have saved more

(07:44):
than one point seven million dollars intheir college savings accounts WOW since twenty seventeen,
which is when Providence Promise was launched. So we're super excited to spend
an afternoon celebrating their success their decisionto you know, plan for their children's
higher education and make this decision thatyou know, we want, We want

(08:09):
to do this now, and wewant to give ourselves the best chance to
give our children that option. Sowhen is five to nine Day this year?
This year, Providence Promise will becelebrating it on Saturday, May fourth,
from about twelve to three pm.It's going to be at the West
End Community Center in Providence, RhodeIsland. So the event will feature themed

(08:33):
activities, food, music, entertainment, a resource there with over twenty community
partners and local sponsors who will beable to set up tables and interact with
families and talk about what programs andservices they have to offer to the community.
There will also be a member ledBig Sale, a member led Lemonade

(08:58):
stand led by some of our youth, our middle schoolers and high schoolers,
where they will have an opportunity toraise funds during the event to invest into
their own activities that take place throughour programming. And we also will have
some speaking remarks featuring some local legislatorsand dignitaries that we're really excited to have,

(09:20):
including Mayor Smiley. We'll also haveGeneral treasure Diosa. We'll be hearing
from a student speaker as well asa parent speaker, and hopefully providing a
ceremonial citation to one of our studentsto celebrate the graduating class of seniors.
We expect forty five students to graduatefrom high school this year who are enrolled

(09:41):
in our programs. Well, itsounds like it's going to be a lot
of fun and a great way tolearn about those five to nine plans.
If you have young children you wantto plan for their college education, you
definitely want to check out this event. Come out and enjoy five to nine
day with Providence Promise. It isSaturday, May fourth, that is from
noon to three pm the West andCommunity Center in Providence. Where can people
go to find out more? Folkscan check us out at our website.

(10:05):
We are Pvdpromise dot org. Thereis a separate page dedicated to our five
to nine day event, which alsofeatures information on some of our sponsors.
Our goal is to raise one hundredand seventy five thousand dollars for this year's
event. We were very successful atraising one hundred and fifty five thousand dollars

(10:26):
last year from over sixty local businesses, foundations, individuals who chose to sponsor
the event, and so this yearwe're hoping to surpass that goal. And
folks can see who is currently sponsoringthe event and receive information about how they
can sponsor the event, as wellas a ten if they're interested there on
that web page. Well, thankyou so much for all you do to

(10:48):
help kids and families prepare for college, and good luck with this event.
Rachel Palumbo, Development manager of ProvidencePromise, thank you so much for joining
me today. Thank you so muchfor having me. This is really wonderful
and I appreciate you helping us,raise awareness for our programs, the work
we're doing here, and then broadlythe tools that families can use to help

(11:09):
their families safer. Higher education