Taxation of Prepaid Tuition Plans and the 1997 Tax Provisions -- Middle Class Panacea or Placebo? Continuing Problems and Variations on a Theme

44 Pages Posted: 5 May 2015

Date Written: 1997

Abstract

This article addresses the continuing tax issues and policies attendant to one form of financing the costs of higher education -- prepaid tuition plans. Although prepaid tuition plans have been in existence for a number of years,8 they have become particularly noteworthy in light of three recent developments, which will be addressed in this article.

The article concludes that providing tax advantages for prepaid tuition plans is misguided tax policy disguised as middle-class income relief, and the article proposes that tax incentives for higher education be made more equitable. In sum, the prepaid tuition plan tax provisions and other tax incentives are more a middleclass placebo than panacea.

Keywords: higher education, IRS section 529, original issue discount rules, OID rules, prepaid tuition plans, student loans, tax incentives, tax policy, taxation

Suggested Citation

Lustig, Eric A., Taxation of Prepaid Tuition Plans and the 1997 Tax Provisions -- Middle Class Panacea or Placebo? Continuing Problems and Variations on a Theme (1997). Akron Law Review, Vol. 31, No. 1, 1997. Available at SSRN: https://ssrn.com/abstract=2600202

Eric A. Lustig (Contact Author)

New England Law | Boston ( email )

154 Stuart St.
Boston, MA 02116
United States

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