Qualified Tuition Plans

A qualified tuition plan (QTP) is a personal savings account. You use it to pay for a student’s qualified education expenses. The student must go to an eligible school. Distributions from the account are tax-free if you use the money for qualified expenses like room and board.

A state or an agency of the state usually establishes QTPs, and most states now offer them. Also, most plans are open to residents of any state. A private educational institution can also start a QTP. However, you can only use the money to prepay qualified education expenses.

An eligible educational institution is:

  • One of these:
    • College
    • University
    • Vocational school
    • Other postsecondary educational institution
  • Eligible to participate in a student-aid program administered by the Department of Education

Contact your state government or the educational institution to find out if they participate in a QTP.

To learn more, see these publications at www.irs.gov:

  • Publication 525: Taxable and Nontaxable Income
  • Publication 970: Tax Benefits for Education

Related Topics