Senate Bill Encourages College Savings

Hugh T. Farley

April 09, 2008

The State Senate unanimously passed a bill (S.6776) improving New York's College Choice Tuition Savings accounts, commonly called "529" accounts.

The legislation permits persons other than the account holder to make deposits into these tax-advantaged savings accounts, which are established under federal law to assist families in saving for college expenses.

The legislation is sponsored by Senator Hugh T. Farley (R,C - Schenectady), who is Professor Emeritus of Business Law at the University at Albany.

"College is expensive, but higher education is one of the best investments a family, and society as a whole, can make," Senator Farley said. "This legislation will encourage additional ways to save for college."

Under the Senate-passed legislation, grandparents could contribute toward the college tuition of a grandchild, employers could offer matching contributions as an employee benefit, or community organizations could provide scholarship-like incentives to students. Most other states already allow third-party contributions.

The bill does not affect the actual ownership of the account. It has no budget impact, as the tax exclusion remains available only to the account holder.

The bill now goes to the Assembly, where it is sponsored by Assemblymember Darryl C. Towns (D - Brooklyn).