As a father with two young daughters, State Treasurer
Jonathan Miller has many of the same concerns as other parents. Always in the
top 10 is ensuring that Emily, 7, and Abigail, 5, have the funds to go to college
when the time comes. A program Miller has championed may well turn out to be the
answer for Miller and many other families as well.
Called KAPT-Kentucky Affordable Prepaid Tuition-the
program offers Kentuckians a way to save for a college, university, or technical
school while simultaneously reaping tax benefits. More than 2,700 people signed
up for the program during the first open enrollment period that ended in December,
a number that exceeded Miller's expectations. A second enrollment period begins
Before proposing KAPT during his campaign for state
treasurer and then shepherding it through the legislature, Miller says he studied
the prepaid tuition plans offered in other states. From that research, he decided
that affordability and flexibility would be the two linchpins of Kentucky's program.
"The greatest benefit of KAPT is that within the
next decade, tens of thousands of Kentuckians will be able to send their children
to college who might not otherwise be able to afford it," Miller says. "KAPT
has helped a lot of families save a lot of money, but the greatest benefit is
to lower- to middle-income families struggling to afford a college education for
Flexibility also remains important to Miller. Therefore,
Kentucky's program allows participants to switch between plans as their finances
and needs change. It also allows participants to use the funds at any accredited
college or university, not just those in Kentucky.
Following is a brief overview of the program and how
it works. For more details, go to their comprehensive Web site at www.getkapt.com.
The site includes lists of eligible schools, the answers to frequently asked questions,
a history of the program, details about all the options, an explanation of how
the program differs from existing savings programs such as the Kentucky Education
Savings Plan Trust (KESPT), and the general tax implications.
How the Program Works
Participants prepay the cost of today's tuition
at a Kentucky college, community college, or technical school through a lump
sum or monthly payment plan. The cost of tuition at a respective Kentucky school
is then guaranteed by the state of Kentucky when the beneficiary actually attends.
The tuition guarantee is good only for Kentucky schools, but funds in a KAPT
account can be used at any institution of higher education that is accredited
by the U.S. Department of Education. Benefits can also be applied toward graduate
Three plans are available:
Value Plan. Guarantees the price of tuition at every
Kentucky Community and Technical College System (KCTCS) two-year community college
and technical school in the state. If the participant attends a more expensive
school that is not in the Value Plan, the family makes up the difference.
Standard Plan. Guarantees tuition at Kentucky's four-year
public colleges and universities. If the participant attends a less expensive
school, the difference can be applied to educational expenses such as room,
board, and books. If the participant attends a more expensive school not in
the plan, the family makes up the difference.
Premium Plan. Intended to cover the average price
of tuition at a Kentucky private college.
The beneficiary must be a Kentuckian but anyone
can contribute to a KAPT account whether they live in Kentucky or not. There
are no age limits on beneficiaries. Any adult or child who is at least two years
from beginning a higher education program is eligible as long as he or she is
a Kentucky resident at the time the application is signed or intends to attend
college in Kentucky.
Participants can switch between plans as needed.
KAPT will calculate a conversion factor between the types of schools included
in the plans based on tuition at each college.
Enrollment in KAPT does not guarantee acceptance
into any school.
KAPT investment earnings are exempt from all state
and federal taxes.
The program is not an individual savings account.
It is a trust fund that combines the contributions of all participants. However,
KAPT does maintain separate accounting records for each participant and purchasers
receive annual account statements reflecting contributions, distributions, and
other financial data relating to their KAPT account. The fund is administered
by a 12-member board, with the state treasurer as chair.
Any investment, including KAPT, is likely to affect
financial aid eligibility.
Participants can choose to make a single lump sum
payment or monthly payments over three, five, seven, or more years with some
money down. The total of the monthly payments is higher than the lump sum purchase
Benefits can be transferred among siblings and cousins
with no penalties.
Enrolling in KAPT
Enrollment periods are scheduled throughout the
year. The next enrollment period for KAPT is February 2 to April 15, 2002. Applications
that you can print out or complete digitally will be available on February 2
on the KAPT Web site at www.getkapt.com.
Or call 1-888-919-KAPT (5278) for an application or for more information.
For More Info...
Toll Free 1-888-919-KAPT (5278)