Oklahoma families can deduct up to $20,000 each year for their contributions to the states college savings plan, and their investment can grow tax-free.
This legislative session, an effort is under way to eliminate this tax deduction that is critical for many middle-income families. Long-term gains for our state and people should not be sacrificed for short-term expediency. So long as Oklahoma has an income tax, the state tax deduction for contributions to the Oklahoma 529 College Savings Plan should be maintained to help our families responsibly prepare for the expenses of higher education.
Since the plans inception in 2000, Oklahoma families have used more than $150 million from the Oklahoma 529 College Savings Plan to fund postsecondary education expenses. The plan presently contains more than $500 million in 52,000 accounts. Growth in the Oklahoma plan far outpaces those in states that do not have an income tax deduction.
The Oklahoma College Savings Plan incentive proves not only commitment to the future of a child, but the future of our state. The program was enacted to encourage families to start saving early so their child, grandchild, niece or nephew can enjoy the benefits of higher educational attainment. Not only does the graduate gain, but the residual effects of education benefit us all.
The Oklahoma 529 plans and accompanying tax deduction are important tools to assist with the demands of a globally competitive workforce and the increasing financial burden of college, considering:
The cost of college is a barrier for many families and is increasing every year.
National student loan debt now exceeds total credit card debt, according to the Federal Reserve.
Only 22.7 percent of Oklahomans over the age of 25 have completed a college degree.
Oklahoma lags behind both the national and regional average of college graduates.
The only border state with a lower percentage of college graduates is Arkansas.
The unemployment rate in 2010 for those with a bachelors degree was half that of high school-only graduates.
Lifetime earnings of those with a college degree surpass those with no post-secondary education by $1 million.
State leadership should support incentives that earn a high rate of return on investment. With an annual cost of $2.4 million and a benefit of more than $1 million in lifetime earnings for each additional college graduate, there is no greater return on investment than the Oklahoma College Savings Plan.
The Oklahoma College Savings Plan is putting higher education within reach for many Oklahoma families. Policymakers should strive to build on this success, not dismantle it.
Miller is the state treasurer of Oklahoma.