College Savings Plan with Matching Funds

Rationale

Having a college education is strongly correlated with higher income and higher levels of net worth. Unfortunately, the cost of a college education is still beyond the financial means of many families. State college savings (or 529) plans allow families to begin saving early for a child's education, thus ensuring that they will have enough money when college begins. Thanks to recent tax law changes, which make withdrawals from the plan for qualified expenses tax exempt, investors, financial institutions, and states have all been showing greater interest in these college savings vehicles. For the most part, college savings plans appear to be a new wave in tax-sheltered asset accumulation for moderate- and higher-income households. Recognizing this, a few leading states provide some level of matching funds to low- and moderate-income families to encourage participation in their state's college savings plan.

About Measure

States that provide matching grants to the college savings plans of low- to moderate-income families (in 2002).

Source

M. Clancy. (Personal communication, March 2002). St. Louis MO: Center for Social Development, Washington University at St Louis.