| These plans allows participants to contribute to an account
that is established for paying qualified higher education expenses of the
beneficiary or it can be used to prepay tuition benefits on behalf of a
student. The funds can be used for any course of undergraduate,
graduate or professional study and there are no restrictions on enrollment
status.
Parents, grandparents, friends or even the child may contribute to a
Qualified State Tuition Program. No tax is due in connection with the plan
until the money is withdrawn. These plans
allow families to save not only for tuition but also certain room and
board charges for students who attend college at least half-time.
529 College Saving Plan
| The 529 College Savings Plan allows parents to save
for college tax-free, and tends to have a low impact on need-based
financial aid eligibility. Unlike prepaid tuition plans, there
is no lock on tuition rates and no guarantee. The value of this
savings plan is counted as an asset of the account owner when
completing the Free Application for Federal Student Aid (FAFSA), unless the
account owner is a dependent student. |
Prepaid Tuition Plans
| Prepaid tuition plans are college savings plans that
are guaranteed to increase in value at the same rate as college
tuition. Prepaid tuition plans are exempt from federal income
taxes and in some cases exempt from state and local taxes as well.
The redemption value of the prepaid tuition plan is counted as an
asset of the plan owner (unless the owner is a dependent student)
when completing the Free Application for Federal Student Aid (FAFSA). |
For information about the qualified tuition program in Ohio, visit the
Ohio Tuition Trust Authority website at http://www.collegeadvantage.com.
Additional information on all education-related tax benefits is
available in IRS Publication 970. This publication can be viewed
online by visiting the IRS website at http://www.irs.gov
or you can access the publication in Adobe Acrobat format by clicking
here. (Adobe Acrobat Reader, a free download from http://www.adobe.com
is required to view this publication from the IRS) |
