State treasurer wants more people to use the Oregon College Savings Plan
The Oregon State Treasury’s Office wants more state residents to take advantage of the Oregon College Savings Plan – especially more low-income families and minority families.
PORTLAND, Ore. (KOIN) – The Oregon State Treasury’s Office wants more state residents to take advantage of the Oregon College Savings Plan -- especially more low-income families and minority families.
State Treasurer Tobias Read said right now, the families taking advantage of the Oregon College Savings Plan are mostly white people who are relatively affluent and who live in metropolitan areas.
He’d like to see the people using the program reflect Oregon’s true diversity.
“We want to be able to say to every kid, ‘You're capable and we believe in you,’ and that's what an account like that does,” he said.
Research done by the University of Michigan’s Center on Assets, Education & Inclusion found that a child from a low- or moderate-income household who has a college savings account of $1 to $499 before they reach college age is over three times more likely to enroll in college and four times more likely to graduate college than a child without a savings account.
The Oregon College Savings Plan is a state-sponsored 529 plan that anyone who lives in or pays taxes in Oregon can open. It comes with special tax advantages and earns interest just like any other college savings plan.
The money saved in the Oregon College Savings Plan can be used for not only tuition at any higher education institution that is eligible for financial aid, but also for books, room and board, computers and more.
Read said there are two programs he wants to make sure everyone knows about. The first is the Baby Grad program where anyone who opens an account before their child’s first birthday receives an automatic $25 contribution from the state.
The same goes for the Kinder Grad program. Anyone who opens an Oregon College Savings Plan for their kindergartener will get a $25 contribution from the state.
People who have an Oregon College Savings Plan for their child can receive up to $300 a year in state income tax credit.
“If a couple in the lowest income bracket can come up with $300 over the course of a year, they’ll get $300 back and they can just recycle that year after year,” Read said.
The credit isn’t just for couples or for people in the lowest income brackets. Individuals and couples who earn any amount of yearly income are eligible depending on how much they contribute to the savings plan annually.
Another way families can save for their childrens’ future is by returning their cans and bottles. Anyone who visits a BottleDrop location can put their deposit directly into their child’s Oregon College Savings Plan. Other people can also donate to a child’s savings plan by linking their BottleDrop account to it through a custom gifting page. The state has directions online for how to do this.
Oregon College Savings Plan funds can be used in any state or any institution around the world that is eligible for federal financial aid.
If a child decides not to pursue any sort of higher education, or if they receive enough scholarships to cover their expenses, Oregon College Savings Plans can be transferred to anyone within a first cousin relationship, including parents, to use for their higher education.
If a family does not wish to transfer the money to a relative, the funds can be withdrawn, but any withdrawals that do not go toward qualified expenses will be subject to federal income tax and may be subject to a 10% federal penalty, along with possibly state and local income taxes.
Read said when he thinks of the Oregon College Savings Plan, he thinks of each child’s potential. It brings back memories of an event he once attended at an elementary school where students dressed as the career they wanted.
He said it’s important to let kids dream big early on and then support those dreams financially in the future with an investment in their education.