College Savings Plan Law Eases

With the cost of higher education rising each year, New York State Governor David Paterson recently signed into law a bill that will make it easier for relatives, employers and other financial sources to contribute to the New York College Choice Tuition Savings Program. The law eases restrictions on who can contribute to a person's state-sponsored college savings account, also known as a 529 account.

"Planning for financing a college education is one of the biggest responsibilities parents face today," Paterson stated. "We have seen skyrocketing increases in tuition and often our children are shouldering this burden with loans that remain until our children have children. If a child's relative, a parent's generous employer or a scholarship fund chooses to invest money in an existing 529 account, the state should not discourage the investment choice."

According to the NYS comptroller's website - www.osc.state.ny.us - the 529 account, which the comptroller's office oversees, is designed to help individuals and families save for expenses at public or private colleges and universities, trade schools and business schools in the state, the US and around the world. Since the program's inception in September 1998, more than 250,000 accounts have been opened.

"We're trying to ensure that these individuals have that guaranteed flexibility in being able to save for the children's college future," said NYS Senator Ken LaValle (R-Selden), who co-sponsored the bill. "So this is another phase in helping parents prepare for their children's college education."

"I think it's a very good law," NYS Assemblywoman Patricia Eddington (WF-Medford) added. "I know how difficult it was for me when my kids were going to college."

When Eddington and her husband, Suffolk County Legislator Jack Eddington (WF-Medford), put their son and daughter through college, "We had to mortgage my home twice," she said. After their children graduated, they were shouldered with the burden of having to pay back their student loans, she said. "It's like a monkey on your back," she said. "You'll be paying those [loans] back for the rest of your life."

In the past, according to Paterson's office, relatives and employers who wished to contribute to someone's account were unable to do so and, instead, had to open up a separate 529 account. In the past five years, Paterson's office stated, more than 20,000 checks valued at more than $57 million were rejected from these 529 accounts because they were not submitted by the account owner.

When asked if the comptroller's office received any complaints about this, spokesperson Vanessa Lockel stated, "We are unaware of any complaints about people needing to open new accounts if they wish to make deposits for nieces and nephews. The governor signed a bill on May 21 that allows third parties to make contributions to 529 accounts."

Now that Paterson signed the bill into law, according to the governor's office, New York now joins 30 other states that permit those outside immediate family to contribute to the student's 529 account. "It's a very important piece of legislation, in that it eases the burden on students and their families ... so they can go to college," Eddington said. "It's getting harder and harder to get student loans today."

http://www.zwire.com/site/news.cfm?newsid=19802473&BRD=1776&PAG=461

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College Savings Plan Law Eases