Our Story
The story of 529 plans is closely tied to the work of state financial leaders and the organization they created to help families save for education.
In the late 1980s and early 1990s, college costs were rising faster than most families’ incomes, and student debt was becoming a growing concern. Several states began experimenting with new ways to help families prepare. Programs in places like Florida, Michigan, Ohio, and Wyoming allowed families to either prepay tuition at current prices or save in special accounts for education. These early efforts were most often run by state governments, often through the office of the state treasurer, and they showed that states could play a powerful role in making college more affordable.
At the same time, state treasurers across the country were already working together through the National Association of State Treasurers, or NAST. Founded in 1976, NAST is a nonpartisan organization that brings together state treasurers and other top finance officials from all 50 states, the District of Columbia, and U.S. territories. Its mission is to help these leaders share ideas, improve public finance, and serve citizens more effectively. As education savings programs began to appear in different states, NAST became a natural place for those ideas to be shared and refined.
In 1991, recognizing the growing importance of these education savings efforts, NAST helped create a specialized affiliate: the College Savings Plans Network, now known as The 529 Network. The network’s purpose was simple but important—to act as a hub for information about state-run college savings and prepaid tuition programs. It allowed state officials and their private sector partners to learn from one another, develop best practices, and speak with a more unified voice when dealing with federal policymakers.
A 529 makes it easy for me to put something aside each month for my kids to go to school without having to think about it. It’s a better option than a regular savings account in a bank and I can easily put monetary gifts from relatives in. While I’m not loading it up, every little bit will be helpful someday.
Kelly F.
A major turning point came in the mid-1990s. In 1994, a court ruling confirmed that Michigan’s prepaid tuition program could offer tax-free benefits, which encouraged other states to expand their own programs. Building on this momentum, Congress passed legislation in 1996 that created Section 529 of the Internal Revenue Code. This law officially recognized “qualified tuition programs” and gave them favorable federal tax treatment. From that point on, these programs became known as “529 plans.”
The real breakthrough for families came in 2001, when federal law was strengthened so that earnings in 529 plans could be withdrawn completely tax-free when used for qualified education expenses. This made 529 plans far more attractive and helped them grow rapidly. Within a few years, nearly every state had launched its own plan, offering either savings-based plans, prepaid tuition plans, or both.
Throughout this growth, NAST and The 529 Network played key behind-the-scenes roles. NAST provided the leadership network of state financial officials, while The 529 Network focused specifically on education savings. The 529 Network tracked participation and assets, shared data, monitored federal legislation, and advocated for policies that made saving for college and other forms of education easier and more effective. It also helped educate families by supplying tools and resources that explain how 529 plans work and how to choose among them.
We are thankful that the 529 plans have allowed our family to plan for and fund the educational expenses for our eight children. The small, regular contributions have grown and continue to grow alongside our children.
Rick S.
Today, 529 plans exist in almost every state and hold billions of dollars for millions of families. What began as a few state experiments has become a nationwide system of education savings, built through cooperation among states, supported by federal tax law, and guided by organizations like NAST and The 529 Network. Together, they helped turn the idea of saving for college into a structured, accessible, and widely used part of financial planning in the United States.