Nothing is certain, the saying used to be, but death and taxes. We’d add college tuition going up and up and up.
That is why, in the season of gift-giving, parents and friends of future students ought to look into an easy way to save for college expenses through the state Treasury.
“Recently, we’ve had a lot more grandparents take advantage of it,” state Treasurer John N. Kennedy said of the START College Savings Program.
The savings program was started years ago by then-Treasurer Mary Landrieu, but it’s grown a lot lately for the reason we’ve cited above, tuition rising sharply in the past decade as general state support for higher education has been cut by the Legislature.
The Treasury has contracted with a low-fee manager for the START accounts, which can be opened with as little as a $10 contribution, Kennedy told The Advocate’s editorial board. The investor chooses a particular Vanguard fund option for the account.
START enrollment also is boosted by a state tax break. An investor — parent, grandparent or just a family friend — can exempt up to $2,400 in deposits per year from income reported on Louisiana state tax returns. Married couples filing jointly can exempt up to $4,800 a year.
Earnings in START or other funds, called 529s because of a relevant section of the tax law, are tax-free.
When a student goes off to college, the fund can be cashed out for use for college tuition and fees, or computers or other legitimate college expenses.
The Louisiana program is for residents only, but the proceeds of the savings account can be used for college expenses at state colleges or those out of state. That includes the increasingly popular options of community or technical colleges. Proprietary schools for a particular business certification also are eligible.
The program includes a way to shift the beneficiary to another family member without tax consequences, according to the Louisiana Office of Student Financial Assistance.
Kennedy says the program has blossomed to 52,000 active participants and nearly $600 million in total assets, so it is clear that the advantages of START investments are being recognized. The steep rise in tuition at Louisiana’s public colleges in recent years is a good reason for parents to take another look at this program.
While we endorse the idea of Gov.-elect John Bel Edwards to raise state support to colleges to make up for the years of cutbacks, the reality is that tuition almost never goes down. A tax break for today and a long-term savings fund for education in the future are clearly going to be valuable for Louisiana’s next generation.