College Savings Plan Made Easier

By Alex Cameron, NEWS 9

OKLAHOMA CITY -- Oklahoma lags behind much of the nation in the percentage of kids who go to college, but a step announced Thursday could begin to change that. The state is trying to make it easier for parents to save the money necessary to send their kids to school by expanding the college savings plan.

The Oklahoma College Savings plan has been around for nine years, and like most 529 savings plans, it provides significant tax breaks to those who invest in it. The problem is getting people to invest, especially since the cost of college tuition continues to rise.

At a news conference Thursday, finance experts explained the state's current plan is what's know as a "direct sold" plan, meaning investors couldn't buy it through their broker, but had to purchase it directly from the plan administrator.

"And in many cases they didn't get that done. I mean my own clients; they haven't gotten it done yet. They've procrastinated, and really college savings is something that's too important to procrastinate," Financial Advisor Jim Freudenberger said.

Under the new Oklahoma Dream 529 plan, procrastinating parents can invest through their broker if they choose, and still get all the benefits of the Oklahoma College Savings Plan.

"Being the $20,000 per year per family deduction on the income taxes, it still grows free of any federal or state income tax. And still, as long as you pull it out and use it for college related expenses or certified trade school related expenses, there's absolutely no income tax," Oklahoma State Treasurer Scott Meacham said.

Educators said there's no sign that Oklahoma colleges will be cutting back on the amount of financial aid they offer to students next year, and the largest state scholarship program, Oklahoma's Promise, remains fully funded. However, the wisest course is to build up your own savings.

"Yes, there may be financial aid. We hope there is. But a family that knows they have dollars in their savings' account that they control, that's what they can really count on," said Bryce Fair with the Oklahoma State Regents for Higher Education.

There are people who are going to be concerned about investing money right now, but Treasurer Meacham said the Dream 529 plan has several very conservative and safe investment options.

There are currently about 42,000 Oklahoma College Savings Plan accounts open. Officials hope, with the addition of this new plan, that the number of accounts will triple.

Click here to learn more about the Oklahoma College Savings Plan and open an account.