New York Gov. Kathy Hochul has signed a bill that expands how students can use investments in their higher education. The legislation, signed Sept. 5, aims to make it easier for NYU students with New York 529 plans to use their remaining savings post-graduation.
Officially known as “qualified tuition plans,” 529 plans, specifically education savings plans, allows beneficiaries to use the invested funds to pay for specific higher education expenses — such as college tuition, books and certain room and board costs — at any U.S. college or university without incurring federal tax upon withdrawal. In New York, 529 account holders also see a state tax deduction when using the funds for such expenses.
Now, students can repurpose funds in their accounts to pay off education loans and interest as well as to support their Roth individual retirement accounts with rollover deposits without facing tax consequences. The change makes the state’s law parallel federal tax laws regarding regulated uses of 529 plans.
“I know my parents felt various pressures putting money into a 529 account for me,” Tisch junior Tessa Dillman said in an interview with WSN. “If I didn’t end up pursuing a college degree, it would have been a waste of money that they would end up having to pay taxes on.”
In a CNBC report in June, NYU ranked second in the highest total cost of attendance among U.S. colleges and universities, falling only behind Columbia University. 24% of undergraduate students at the university take federal loans, and undergraduates leave NYU with a median federal loan debt of $20,500, according to the U.S. Department of Education College Scorecard.
“In my case, my parents had started a 529 account but couldn’t afford to keep paying into it,” CAS senior Lauren Daley, whose education is funded through scholarships and student loans, told WSN.
NYU has implemented a number of financial aid initiatives over the past several years, dropping its ranking from the fourth to 43rd-most expensive university from 2015 to 2023. In 2021, the university also started meeting 100 percent of students’ demonstrated financial need. Last October, President Linda Mills announced at her inauguration ceremony that students from households making under $100,000 will no longer have to pay tuition.
An NYU spokesperson did not respond to multiple requests for comment.
Contact Gigi Liman at [email protected].
