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Blagojevich signs law to help families save for college     Send a link to a friend

New tax deduction keeps more money in the pockets of Illinois families

[JULY 31, 2004]  SPRINGFIELD -- Gov. Rod Blagojevich signed into law on July 26 new tax benefits for families preparing for their children's college education. House Bill 4914 creates a new state income tax deduction for people prepaying college tuition through the state's "College Illinois!" 529 prepaid tuition program.

"A tax break to pay for college is just the kind of tax break working families need and deserve. We must help Illinois families secure college education for their children. I am proud of the commitment we are making to ensure that these dreams come true," Gov. Blagojevich said.

Beginning in 2005, Illinois taxpayers will be able to deduct up to $10,000 paid into a College Illinois contract during the year. Since 1998, an estimated 23,000 families have entered into more than 42,000 prepaid tuition contracts through the program, which is administered by the Illinois Student Assistance Commission. Those contracts represent over 105,000 years of college education already paid on behalf of students.

House Bill 4914 was sponsored by Sen. James Clayborne, D-East St. Louis, and Rep. Kevin Joyce, D-Worth.

"Given the incredible rise of college tuition over the last several years, we definitely should help families prepare for the cost of college. Providing a tax deduction is a terrific incentive to encourage families to consider prepaying for college now, so they aren't faced with outrageous tuition bills later on," said Rep. Joyce.

Each year, the College Illinois program has a five-month enrollment period during which public university tuition contracts and community college contracts can be purchased. The next enrollment period will open on Oct. 27 and extend through March 31, 2005. The program offers a variety of plans under which contracts can be purchased, either by lump sum or through installment payments. Students with paid contracts are assured full payment of tuition and mandatory fees at Illinois public universities or community colleges regardless of how much those college costs increase in the future.

 

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Notably, the benefits can be used at colleges and universities nationwide, public or private. Students who choose to attend out-of-state or private colleges and universities will receive benefit payments equal to the average Illinois public university tuition and fees in effect at that time.

Participants in another state college savings program, Bright Start Savings, administered by the state treasurer's office, have benefited from a similar tax deduction since 2002. The new law provides that the Bright Start tax deduction will also be capped at $10,000 per taxpayer beginning in 2005, ensuring equal state tax treatment for both programs.

"Families participating in either of these successful college savings programs should receive the same tax-saving benefits," said Sen. James Clayborne. "Anything we can do to make it easier for families to give their children a college education is the right thing to do."

The average tuition and fees at a state university in 2004-2005 will be around $6,500, according to the Illinois Student Assistance Commission, while private universities in the state will average nearly $20,000.

Information on the College Illinois program can be found at www.collegeillinois.com or by calling toll-free (877) 877-3724. Information on the Bright Start program is available at www.brightstartsavings.com or by calling (877) 43-BRIGHT [(877) 432-7444].

[News release from the governor's office]

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