529 savings accounts now apply to private schools
Legislation gives parents options, enrollment VP says
The new tax plan would assist in saving money for schools like Cathedral.
The recently passed tax bill, which Congress approved and President Trump signed, will have a direct effect on 529 plans and how at least some parents will save for their child’s tuition to this school.
These 529 plans are tax free bank accounts that previously had been used only for college, but which now apply to private elementary schools and high schools, including Cathedral. “529 plans are not new at all; they go back maybe by 15 (or) 20 years,” said Mr. Duane Emery, vice president for enrollment management. “What has changed with the new law is the ability to spend money in limited amounts on private schools.”
According to the Forbes website, “With the new law, families will be also able to withdraw up to $10,000 per year tax-free for elementary, high school or homeschool expenses.”
Emery noted that the new plan does not change the ability to save for college or improve their ability to go to the colleges of their choosing. The new plan takes an opportunity that already provides for a way to save for college but also gives families more choice in how they use their 529 plans, as they now can use those dollars for college expenses as well as the costs of private grade schools and/or high schools.
In the short term, Emery says that the plans won’t affect Cathedral’s tuition rate, but it will most likely improve students’ ability to pay. Tuition for the current school year is $15,025, and there is a student activity fee of $525. This amounts to out-of-pocket expense of $15,550. Over four years, that is $62,000 for the full Cathedral experience, and families can use money in their 529 plans to help cover this cost.
However, the Cathedral Fund will continue to support students who need help paying. The annual raffle ticket sales aren’t going anywhere.
Though Emery notes that withdrawing money to pay for high school may result in there being less money for college, he fully supports the plans. Emery said, “I think (the 529 plans have) always been a smart investment. You get more choice as to where your dollars are going (with the new plans).”
