Maryland 529 whistleblower says he warned agency about negative impacts to parents' accounts

A whistleblower and former longtime employee of Maryland 529, the state agency that provides college savings plans for families, is telling FOX 5 about the concerns he shared with leadership of the agency, which has come under scrutiny after hundreds of parents say they could not access the funds in their savings accounts.

Spencer Fell, who worked for Maryland 529 for 16 years, says he warned leadership that changes they were making to earnings calculations in 2021 would have a negative effect on customers.

Fell tells FOX 5 that, while he did not see any nefarious behavior from leadership during his tenure, he tried to warn the former chief financial officer of the agency about the negative impacts of the changes.

According to Maryland 529's annual statements, the investments returned approximately six percent on average from 2002 to 2022. Parents who started investing in the early 2000s and pulled their money out before 2021 got what they put in plus investment earnings over the years.

But in 2021, Maryland 529 recalculated the earnings, and as a result, wiped out the majority of customers' investment earnings. For some, that meant losing tens of thousands of dollars.

READ MORE: Lawmakers to hold hearing on Maryland 529 savings account issues

"They would be entitled to 100 percent of whatever the earnings losses and total would be," explained Fell to FOX 5. "And that was not only a great tool for the customer in terms of convenience and security, it's also something we've been doing since the beginning of time. To just cut that back to this ridiculous calculation was just preposterous."

In a statement on Thursday, the Maryland 529 board said they still have not been able to reach the correct calculation for parents' accounts."

In January, Maryland 529 Board Chairman Peter Tsirigotis stepped down amid the issues related to the college savings accounts.