Although many people think education savings accounts are only used by parents to save money to pay for their children’s college, that isn’t necessarily the case, according to the Kentucky Higher Education Assistance Authority (KHEAA).
KY Saves 529, the state’s official education savings vehicle, can be used to save money for children’s K–12 education, as well as for college. But accounts don’t have to be opened by parents. Grandparents and other relatives can open accounts for children. Adults can even open accounts to save for their own college education.
“Whether for a child, a grandchild, another relative or for yourself, KY Saves 529 accounts can be a great resource for Kentuckians to save toward their family’s educational goals,” said Gov. Andy Beshear.
A KY Saves 529 account can be opened for as little as $25. Minimum contributions after that are $25 each. After opening an account, people can also invest through payroll deductions of at least $15 per pay period.
Withdrawals for qualified education costs are exempt from federal tax. One recent change in federal tax law also allows funds in KY Saves 529 accounts to be used to pay expenses for most apprenticeship programs. Another change lets account holders use up to $10,000 in their accounts toward repaying eligible student loans.
Qualified withdrawals by Kentucky residents are also exempt from state tax, and KY Saves 529 accounts are not included when schools determine Kentucky need-based college financial aid. Contributions qualify for the current federal $15,000 annual gift exclusion.
For more information about KY Saves 529, visit kysaves.com.
KHEAA is the state agency that administers KY Saves 529 and Kentucky’s student financial aid programs, including the Kentucky Educational Excellence Scholarship (KEES). Its sister agency, the Kentucky Higher Education Student Loan Corporation (KHESLC), offers low-cost Advantage Loans to help students and parents pay for college or refinance student loans. For more information about Advantage Loans, visit advantageeducationloan.com.
Many of KHEAA’s student aid programs are funded by Kentucky Lottery revenue.
For more information about Kentucky scholarships and grants, visit kheaa.com; write KHEAA, P.O. Box 798, Frankfort, KY 40602; or call 800-928-8926.
Kentucky Higher Education Assistance Authority
