Campsen: S.C. ‘Future Scholar’ college savings plan earns best-in-class
A good education gives our children a better chance to succeed in today’s competitive global economy. The state of South Carolina has gotten it right when it comes to helping families save for college.Let’s face it, the government has never really been a model of efficiency, nor a place to look for new and innovative ideas. Well, we would like to tout a very nice exception to that trend: South Carolina’s 529 college savings program.
The program is called “Future Scholar,” and is sponsored by the State of South Carolina and administered by the State Treasurer’s Office. Sen. Campsen authored legislation creating the Future Scholar Program, and assisted the Treasurer’s Office in formulating its operational and investment parameters.
College savings programs are named for Section 529 of the Internal Revenue Code, the section of tax law that regulates them. These plans are savings and investment programs specifically designed to incentivize families to save for college. As college tuition soars, implementing an early savings strategy has become essential. There are approximately 107 plans of this type offered by states and investment companies around the country. This time, South Carolina got it right with one of the best 529 programs in the nation.
According to national expert Joe Hurley, South Carolina offers one of the best plans available. Mr. Hurley is the author of “The Best Way to Save for College — A Complete Guide to 529 Plans,” and founder of the Savingforcollege.com Web site which ranks each state’s college savings program. South Carolina’s Future Scholar Program has been given their highest rating of 5 CAPS, one of only eight 5 CAP-rated plans in the nation. A 5 CAP rating is representative of the overall usefulness and value of the 529 plan. A 5 CAP-rated program offers outstanding flexibility, attractive investments, and additional economic benefits (such as tax incentives) that for some people, at least, will provide a substantial boost to their savings.
Currently, about 35,000 South Carolinians are enrolled in the Future Scholar Program. An additional 29,000 future college students from around the country have invested in the South Carolina plan. Imagine that. The state of South Carolina is offering something that folks across the country are interested in, besides great weather and nice beaches.
The amount of assets currently managed by the program recently surpassed the $1 billion mark, and the maximum contribution limit to any one account has just been raised to $318,000. Additionally during the last month, more investment options have been added to the program.
These new international and bond fund options will be offered to South Carolina investors in the near future. This is great news for families saving to send children to college.
There are many benefits to the South Carolina Future Scholar Program. It is open to any legal U.S. resident, there are no age requirements, the beneficiary of the plan may be changed, and it can be started with as little as a $250 initial contribution. The program affords the participants a lot of control, coupled with great flexibility.
But perhaps the best part of the program for many families is the tax advantage that can be achieved. All South Carolina residents get a state income tax deduction for investing in the Future Scholar plan. In South Carolina, where our state income tax rate is 7 percent, every $10,000 invested in the program saves up to $700 of state income tax.
While your investment in the program grows, the earnings are exempt from both federal and state income taxes, and, when you withdraw money to pay for qualified higher education expenses, you still pay no federal or state income tax on the earnings. Earnings are only taxed and penalized if used for non-education expenses.
Qualified education expenses include college or technical school tuition, housing, books, meal plans, school fees, and required supplies.
So, if you, your children or grandchildren hope to attend college one day, South Carolina has a plan for you. By wisely saving and investing today, a “future scholar” will have a shot at a solid education and a more prosperous future.
We believe in this program so much, we each have enrolled our own children in Future Scholar.
CHARLESTON POST AND COURIER
Monday, August 6, 2007
BY KEN WINGATE and CHIP CAMPSEN
Ken Wingate recently served as interim state treasurer. Sen. Chip Campsen represents Dist. 43, Berkeley and Charleston counties.
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