school bus stock

Sponsors are trying to get the word out that families who pay tuition at elementary and secondary schools are eligible for a federal tax break.

The law, which won approval in the final hours of the 2018 regular session, was sponsored by state Rep. Franklin Foil, R-Baton Rouge.

It is House Bill 650 and Act 687.

The law allows families to open education savings accounts for school tuition for kindergarten through 12th grade.

Those who do so can then take advantage of the law on their federal taxes.

The option was made available to states through the tax cut that cleared Congress last year.

"If I'm a parent or grandparent or relative of the student who invests money you can use this," Foil said Thursday.

Details on how families can open the accounts are set to be released at a press conference on Aug. 6.

The gathering will include Foil and state Treasurer John Schroder, a former House member whose office will oversee the accounts.

Foil said the timing of the press conference is linked to the start of school.

"It is a great program for people who want to take advantage of it," he said.

The measure is called the Student Tuition Assistance and Revenue Trust K-12 program.

It won final approval in both chambers on May 18.

The House approved the legislation 97-0. The Senate did so 32-0.

Nearly 1 in five students in Louisiana – roughly 140,000 – attend private schools.

The new law is a scaled back version of a similar measure that allows both state and federal tax breaks, and matching state dollars, for families that set up savings accounts for college.

That plan is called the Student Tuition Assistance and Revenue Trust program, or START.

The state has more than 61,000 such accounts totaling $886 million.

Lawmakers initially hoped to duplicate that measure for families who pay tuition for the lower grades, sometimes up to $22,000 per year.

The effort was shelved early in the session when sponsors concluded the state could not afford a new entitlement amid recurring budget problems.

Foil hoped to allow families to take advantage of the changes starting with the 2018 federal taxes they fill out in 2019.

However, software issues are limiting the scope of the measure initially.

Under a special provision in the law, those who had START accounts as of Dec., 31, 2017  will be able to withdraw up to $10,000 this year to pay tuition-related expenses for 2018 for children listed as the beneficiary in the START account.

Forms are available at www.startsaving.la.gov/savings/pdf/disbursementk12.pdf 

Some families are already taking advantage.

They have made 173 withdrawals from existing START accounts to pay for 2018-19 expenses, Gus Wales, public information director for the Louisiana Office of Student Financial Assistance, said in an email.

Funds used to pay for K-12 tuition expenses are exempt from federal taxes under last year's tax cut.

The accounts will be open to all families in 2019.

Transfers like those allowed this year will be banned after 2018.

Foil said he hopes to expand the K-12 program, and make it look more like Louisiana's college savings plan, when the state's financial picture brightens.


Follow Will Sentell on Twitter, @WillSentell.