Innovative 529 College Savings Pilot Improves Access to Scholarship Funds

Introduction

St. David’s Foundation proudly operates the Neal Kocurek Scholarship Program, the largest health care scholarship initiative in Texas. By cultivating a thriving, diverse, and community-rooted healthcare workforce, the Foundation strengthens the pipeline of professionals dedicated to advancing health equity across Central Texas.

For the past 20 years, the Foundation has disbursed over $27 million dollars in scholarship to students in Central Texas pursuing healthcare education. More than 850 scholarships have been awarded to students, who were selected for their academic excellence, personal determination, and financial need. However, many recipients have reported a persistent challenge: scholarship displacement.

Scholarship displacement occurs when an external scholarship, such as the Neal Kocurek Scholarship, reduces other forms of student financial aid—including grants, loans, federal work-study or additional scholarships. Institutions may trigger displacement by considering a student “over-awarded” if their total aid exceeds the school’s cost of attendance, which may not include all costs students may actually face, especially if they lack significant financial support from families.

This practice undermines the impact of outside funding and often leaves students with greater unmet financial needs. For Kocurek Scholars, displacement can create significant hardships, limiting how they use their scholarships beyond tuition and books, and ultimately impeding their journey toward a healthcare career.

Learning with a leader in scholarship funding

To address these challenges, in 2024, St. David’s Foundation partnered with longtime collaborator, Students First Consulting (SFC), a nationally recognized leader in scholarship philanthropy. This innovative partnership enabled us to streamline complex operational processes, enhance our research initiatives and identify the most suitable 529 plan providers for our scholars. A 529 plan is a tax-advantaged savings plan for education for qualified expenses.

The Texas College Savings Plan emerged as an exemplary state-level 529 infrastructure, frequently recognized by scholarship professionals for its effectiveness in the field. It provided a robust foundation for scaling the program.

The strategic partnership with Students First Consulting (SFC) streamlined complex operations, enhanced research capabilities, and helped identify appropriate 529 plan providers. Throughout the implementation process, the team felt consistently supported by SFC, which empowered them to act as ambassadors for the new funding mechanism. Engagement from Foundation leadership was essential to the pilot’s success. This initiative marked a major cultural shift away from the Foundation’s historical conservative financial approach. Leadership support empowered the team to pursue innovation with confidence.

What Worked: Findings from Collaborative Innovation in Action

Through the strategic partnership, St. David’s Foundation’s Learning & Evaluation team conducted an in-depth analysis of student financial stability through an improved Student Financial Wellness survey design. This data gave the team a clear understanding of the tangible benefits of 529 processes and enabled them to confidently communicate these advantages, strengthening support for the pilot.

• Payment delivery was accelerated and reissuance reduced, enabling students to receive payments within 1–3 business days. Of the 16 pilot participants using 529 plans, two students requested check reissuance. Normally, this would cause a significant delay, but with 529 processing, checks were reissued immediately.
• The pilot prioritized students most affected by displacement—those who had never previously received funding or who relied on annual rollovers. By leveraging 529 accounts, the Neal Kocurek Scholarship Program unlocked an estimated $60,000 that would have otherwise remained inaccessible. This had a significant impact on the most vulnerable students.
• Pilot participants reported overwhelmingly positive feedback and high satisfaction with the ease of 529 processes compared to traditional funding methods. Students expressed sincere appreciation for the expanded capabilities, which allowed educational funds to address a wider range of needs.

Applying Lessons Learned for Future Scholars

St. David’s Foundation believes that removing economic barriers empowers students to succeed and achieve the financial freedom needed to pursue healthcare education. Implementing the 529 College Savings Plan has proven highly effective, enabling scholarships to be disbursed directly to scholars. This approach not only accelerates access to funds but also provides students with the flexibility to use their awards beyond tuition and books.

Through collaboration with Students First Consulting, the Foundation reduced administrative burdens and operated more efficiently, allowing it to focus more on advancing health and wellness across Central Texas. Looking ahead, these strategic actions are designed to maximize opportunities for students from marginalized communities to thrive and pursue careers in healthcare.

• Expand Access to the 529 Plan: All of the sixteen pilot participants were satisfied with the program. Currently, half of Kocurek scholars receive funding through 529 plans, with a goal of reaching 60% participation by spring 2026 and 100% by fall 2026. Continued growth will depend on increasing student awareness through targeted engagement.
• Minimizing Bulk Payments: Shift away from bulk payment mechanisms and prioritize individualized, timely disbursements that better meet students’ needs.
• Centralize Data with a Student Portal: Consider collaborating with Salesforce partners to develop a secure portal where students can update their information, complete 529 account setup, access resources, track payments, and communicate with the team.

If you are interested in reading the full pilot evaluation, please email [email protected].