Private school parents getting tuition break
The American Press
Parents of private school students in Louisiana have been given a way to put money aside for tuition and earn tax-free interest or dividends on the investment. The savings opportunity has been made possible by congressional tax changes in 2017 and a 2018 act of the Louisiana Legislature.
The new START K-12 savings plan is named for a section of the Internal Revenue Code that Louisiana and many other states are using for college tuition, according to a report in The Times-Picayune. The newspaper said more than 62,000 Louisianans have opened 529 college accounts totaling $891.8 million.
The Legislature extended the college plan to cover kindergarten-12th grade with Act 687 of the regular session of 2018. Rep. Franklin Foil, R-Baton Rouge, sponsored the legislation that was approved unanimously by the House and Senate.
The new K-12 plan is open to parents and grandparents of the 18.4 percent of the state’s children who are attending private schools, which is the largest percentage in the country. The national average is 10.3 percent.
Private school tuition can become expensive. New Orleans area private schools charge annual tuition ranging from $3,800 to $23,000 per child.
The Office of Student Financial Services said a parent or other relative can open a START K-12 account. They can select from among five investment vehicles selected by the state treasurer’s office and managed by The Vanguard Group.
State and federal governments tax the deposits, but not the investment earnings as income if they are used for qualifying education expenses like tuition. Withdrawals are limited to $10,000 per year.
The START K-12 money can be rolled over into a 529-college savings plan when a student graduates from high school, but 529-college money can’t be moved into a START K-12 account.
The National Association of Independent Schools, which serves more than 1,500 private schools in the country, commended Louisiana for starting the savings program.
Myra McGovern, vice president of media for the association, said the program offers both an opportunity and a challenge for those private school parents who started 529 college plans. They have to decide whether to reduce their college contributions or cut back on spending elsewhere, she said.
We don’t see that as a major problem. Parents of private school students are getting an opportunity to have investment earnings help pay K-12 tuition that can be quite expensive.