State College Tuition Plans

State-sponsored programs approved by the IRS that allow a person to prepay tuition at a public university or community college located within the state locking in the cost at favorable rates or open a college savings investment account that can be used to pay qualified college expenses, often at institutions anywhere in the country. The tax on earnings attributable to prepayments on contributions is deferred until the earnings are distributed. If amounts saved through a qualified state tuition program (QSTP) are used to pay for college, the student or the student's parents still may be eligible to claim the Hope Scholarship Credit or the Lifetime Learning Credit, federal tax credits which allow deductions for qualified tuition and related expenses.