|Decision Makers:||State Government|
|Population Reach:||10-19% of WI's population|
|Impact on Disparities:|
Is this program or policy in use in your community? Tell us about it.
College savings programs allow parents, grandparents, and others to invest dollars tax-free to save for future college expenses. According to the SEC, there are 2 types of “qualified tuition programs” 529 plans, a pre-paid tuition plan, and a college saving plans. All 50 states and DC offer at least one type of plan, and several private colleges and universities sponsor pre-paid tuition plans. These programs allow for prepaying or contributing to an account established to cover the costs of higher education at qualifying institutions (IRS).
These plans can be helpful for setting aside college funds, but financial benefits are greater at higher incomes (Dynarski 2004). To date there is little evidence supporting these programs as a means to encourage or motivate education beyond high school, though they may reduce economic barriers for some potential students.
Every state has at least one 529 college savings program, with maximum state tax deductions varying widely.
Wisconsin state college savings programs were initiated in 1996 and serve over 225,000 future students; up to $3,000 per beneficiary per year can be deducted from WI state taxable income. EdVest and Tomorrow’s Scholar are two such programs operating in Wisconsin.
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