A qualified tuition plan (QTP), formerly called a qualified state tuition program (QSTP), is a personal savings account established for paying a student’s qualified education expenses at an eligible educational institution. Distributions from the account are tax-free if you use the money to pay for qualified expenses, such as room and board.
QTPs are generally established by a state or an agency of the state, and most states now offer them. In addition, most plans are open to residents of any state. An eligible educational institution can also establish a QTP, but the money can only be used for prepaying qualified education expenses.
An eligible educational institution is generally any college, university, vocational school, or other postsecondary educational institution that’s eligible to participate in a student aid program administered by the Department of Education. Contact your state government or the educational institution you’re interested in to find out if they participate in a QTP.
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