It's a fact - life is expensive! The cost of everything is rising. From gasoline to health insurance; from dry cleaning to milk - the cost of items we purchase each day continues to creep up. But perhaps one of the most expensive items we will pay for in our lifetime is our children's college education. It's an investment we want to make - one we know we have to make. The U.S. Census Bureau reports that people with a bachelor's degree will earn over 62 percent more on average than those with only a high school diploma. What does that mean long-term? It means that by sending our children to college, they have the potential to make $1 million more over their lifetime if they have some type of higher education degree than those with a high school diploma.
But how do we pay for this all important college education, especially with recent studies that show the price of attending college has risen faster than the price of health insurance, inflation, and unfortunately, the average increase in personal income? According to The College BoardR , the average 2005/2006 tuition increase was 5.9 percent at private colleges and 7.1 percent at public universities. The group estimates that this trend will only continue. In Kansas, all six state universities all will see tuition increases in the 2007 school year. The smallest increase will be at Fort Hays State University with a 4.6 percent increase per semester and the highest increase at the University of Kansas in Lawrence at 13.7 percent each semester.
For families with more than one child the question of how to pay for college is even harder to answer. My husband and I have two children, 11 and 14 years old. The issue is never far from our minds - how are we going to send our kids to college and not end up financially devastated?
During my time as Kansas State Treasurer there are many activities I have been proud of, but nothing more than being the administrator of Learning Quest, the Kansas 529 Education Savings Program. At only six years old, the program has grown to $1.3 billion in assets and over 90,000 accounts. Learning Quest is of immeasurable value to Kansas families. It allows us to save for our children's college education today and gives us a plan for tomorrow.
My office has worked hard to continuously enhance Learning Quest. The plan offers a Kansas state adjusted gross income deduction of up to $3,000 per child ($6,000 if married, filing jointly) to residents investing in Learning Quest. We lobbied our Kansas lawmakers to extend the state income tax deduction to all Kansas taxpayers who invest in any state sponsored 529 education savings program. For contributions after Jan. 1, 2007 you may invest in any state's 529 program and receive a deduction on your Kansas taxes! While we continue to provide more choices within Learning Quest, we believe that taxpayers should be able to pick the plan that best meets their needs and still receive the Kansas income tax deduction. This makes Kansas one of only three states giving this flexibility to their taxpayers.
My office also worked in partnership with Kansas lawmakers to establish a pilot program in which Kansas families with incomes not more than 200 percent of the federal poverty level ($40,000 for a family of four) can receive up to $600 in matching funds from the state for each dollar they contribute to a Learning Quest account.
Families can open an account with a commitment to automatically invest $25 a month or with a single contribution of $500. Once $100 is contributed, the state will match each dollar the participant contributes to their Learning Quest account up to $600. A limited number of accounts are available and families are encouraged to visit www.KansasStateTreasurer.com/KIDS or call 785-296-3171 for more information.
The federal government also recognizes the need for assistance when it comes to sending our children to college. A landmark bill was signed into law recently that will remove the Dec. 31, 2010 expiration date for tax free withdrawals of 529 plan earnings if they are used for qualified higher education expenses.
This is great news for all Kansans who utilize the 529 education savings program! Making the current federal tax treatment of these plans permanent will help encourage investors with young children or grandchildren to use these plans without worrying about paying federal income taxes on earnings that are withdrawn for qualified expenses.
During National College Savings month this September, I would encourage you to begin organizing your plan to pay for your child's college education. Look at all your options and consider what is best for your family. Visit websites such as www.collegeboard.com and www.SavingForCollege.com for helpful information, calculators and unbiased opinions on all the state's 529 plans.
Ensuring that our children receive quality education is of utmost importance to the future of Kansas. If my office can offer any assistance, please feel free to contact us.
