Unlike the grants, the tax deductions have no income limitations. Single North Dakotans may deduct up to $5,000 in contributions to a savings plan, while couples may subtract up to $10,000 from their state taxable income.
North Dakota's college savings plan has been around since September 2001, but only 500 North Dakotans have opened accounts, which now hold about $8.2 million in assets. Last year, the plan's investment manager, Morgan Stanley, was replaced by the Vanguard mutual fund company.
Thirty-one states offer tax incentives to residents who invest in their states' plans, and those tend to spur more interest, said John Heywood, an executive in Vanguard's retail investor group.
"Our experience among other college savings plans is that when a state takes those steps, the plans grow dramatically," Heywood said.
--Associated Press
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