DC Offers Tax-Free College Savings Plan
by Laurent Ross
Just one week ago, I watched my daughter, Tadina, graduate from Duke University. As I bask in the glow of my first college graduate, I think of all the things my money paid for: a top-notch education at a prestigious college, a beautiful campus, well-equipped dormitory rooms, and a basketball team that I have always rooted against. And let me tell you, I paid an awful lot of money for this basking.
While I certainly got my money’s worth (except for that basketball team part), I sure wish that the DC College Savings Plan had been around when Tadina was born. That way, I might have saved even more for her college education and I would have borrowed much less money from the federal government. As it was, the DC College Savings Plan started just two years before Tadina’s high school graduation, so I was only able to save enough through the plan to pay for her first semester in school.
However, Tadina’s younger sister, Machel, should have a lot more money reserved for college when she graduates from high school two years from now, because I have had enough time to do some serious savings through the DC College Savings Plan. The plan allows me to save for Machel’s education while lowering my tax bill.
If you have a small child, you should start saving…now!
Here is how the plan works:
- I save money for Machel’s college education in various investment options offered through the plan.
- All my earnings are free from federal and District taxes.
- The District gives me a tax deduction on the first $3,000 that I save and the first $3,000 that my wife saves – every year!
The fact that the earnings are all tax free (as long as I use the funds for Machel’s college education) and the fact that the District actually gives me a tax deduction every year make the saving so much easier.
And, it’s not just me.
More than 10,000 other people have a DC College Savings Plan and have entrusted more than $110 million dollars to the District. The DC College Savings Plan has already helped some of those parents send their children to college. The plan has paid out nearly $7 million to colleges and universities across the country.
You do not have to be wealthy to start a DC College Savings Plan. Accounts can be started with an initial contribution of as little as $25.
The District also offers additional assistance to D.C. residents through the D.C. Tuition Assistance Grant Program (DCTAG) and the DC Leveraging Education Assistance Program (LEAP). The DC College Access Program (DC-CAP) is offered to all District public school students (both DCPS and charter school students). These programs, together with your savings through the DC College Savings Plan, provide an outstanding combination of resources to maximize your child’s college potential.
Maryland and Virginia residents are eligible for the DC College Savings Plan as well. However, non-District residents will probably be better off investing in their own state plan. You can find out more about the Maryland and Virginia college savings plans at www.savingforcollege.com.
For information about the DCTAG and DCLEAP programs, contact the D.C. Office of the State Superintendent of Education
(202- 727-2824, www.osse.dc.gov). DCCAP can be contacted at the website www.dccap.org.
For information on the DC College Savings Plan, see www.dccollegesavings.com or call 800 - 987-4859. We would love to send you a start-up kit in the mail.
Laurent Ross serves on the board of Capital Area Asset Builders. Mr. Ross is also College Savings Manager for Calvert Distributors, Inc. Send your questions or ideas for future topics to saving@caab.org.
For more information on the DC College Savings Plan, please call 800-987-4859 (800-368-2745 for non-District residents). An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The District of Columbia College Savings Trust Program Disclosure Booklet contains this and other information. Read it carefully before you invest or send money. An investor should also consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s 529 college savings plan.
The DC College Savings Plan is underwritten and distributed by Calvert Distributors Inc., member FINRA/SIPC, a subsidiary of Calvert Group, Ltd.
