Back 

Blog

THE NCSL BLOG

29

By Dustin Weeden

Today is 529 College Savings Day.

College savings plans, frequently called 529 plans because they are regulated by section 529 of the Internal Revenue code, are tax-advantaged investment plans that help families save for future college expenses. Much like individual retirement accounts, investments in 529 plans grow free from federal taxes as long as funds are withdrawn for qualifying education expenses.

In addition to the federal tax benefits, 30 states offer an income tax deduction while three states offer a tax credit for contributions made to state sponsored 529 plans. One of the criticisms of college savings plans is that wealthy families with more disposable income are the primary beneficiaries of the tax benefits.

To  counter this development and to create an incentive for low-income families to save for future college expenses, 12 states have created grant programs that match contributions to 529 plans.

As published tuition prices have outpaced inflation by a 4 to 1 margin in the last 15 years, families have begun saving more for college. Assets in 529 plans have grown rapidly. In 2000, a little more than $9 billion was invested in 529 plans. By the end of 2013, more than $227 billion was invested in 529 plans.

Source: College Savings Plan Network

 

For additional details on tax benefits and recent legislative trends regarding college savings plans, visit NCSL’s Saving for College: 529 Plans website.

Dustin Weeden is a policy specialist in NCSL's Education Program.

Email Dustin

Posted in: Public Policy
Actions: E-mail | Permalink |

Subscribe to the NCSL Blog

Click on the RSS feed at left to add the NCSL Blog to your favorite RSS reader. 

Blog Archives | By Category

About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.

NAVIGATE

Share this: 
Fall Forum 2014
State Vote
We are the nation's most respected bipartisan organization providing states support, ideas, connections and a strong voice on Capitol Hill.

NCSL Member Toolbox

Denver

7700 East First Place
Denver, CO 80230
Tel: 303-364-7700 | Fax: 303-364-7800

Washington

444 North Capitol Street, N.W., Suite 515
Washington, D.C. 20001
Tel: 202-624-5400 | Fax: 202-737-1069

Copyright 2014 by National Conference of State Legislatures