A qualified state tuition program (QSTP) is a program set up to allow you to either prepay a student's tuition or contribute to an account established for paying a student's qualified higher education expenses at an eligible educational institution. Prior to 2002, a QSTP could only be established and maintained by a state or an agency or instrumentality of the state. Beginning in 2002, QTPs (formerly called QSTPs) can also be established and maintained by educational institutions. The program must meet certain requirements. Your state government or the educational institution in which you are interested can tell you whether or not they participate in a QTP.

Qualified higher education expenses. For 2001, these are the tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution (defined below).

In 2001, they also include the reasonable costs of room and board for a beneficiary who is at least a half-time student. The cost of room and board is generally considered reasonable if it is not more than either:

1. The school's posted room and board charge, or
2. $2,500 per year for students living off-campus and not at home.

Note. Calculation of the amount that is considered reasonable for room and board expenses has been changed beginning in 2002. You must contact the educational institution for qualified room and board costs.

For 2002, the definition of qualified higher education expenses has been expanded to include expenses of a special needs beneficiary that are necessary for that person's enrollment or attendance at an eligible institution.

Beneficiary. The beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. The beneficiary can be changed after participation in the QTP begins. If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the beneficiary is the person who receives the interest as a scholarship.

Eligible educational institution. This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.

Previous | First | Next

Publication Index | 2001 Tax Help Archives | Tax Help Archives | Home