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Paragraph (5) of section 529(e) was added pursuant to the
Taxpayer Relief Act of 1997, Pub. L. 105-34, sec. 211(b)(2), 111
Stat. 810, which was passed on August 5, 1997. Institutions
described in section 481 of the Higher Education Act of 1965, 20
U.S.C. section 1088, as in effect on August 5, 1997, are
accredited colleges, universities and other postsecondary
schools. Title IV of the Higher Education Act of 1965, 20 U.S.C.
section 1070, et seq., as in effect on August 5, 1997, authorizes
the Department of Education to provide scholarships, grants, and
reduced-interest loans to students attending eligible
institutions of higher education.
Thus, eligible educational institutions under section
529(e)(5) are colleges, universities, and other postsecondary
institutions which are eligible to participate in a student aid
program administered by the Department of Education. The term
includes virtually all accredited public, nonprofit, and
proprietary postsecondary institutions. Sec. 1.25A-2(b), Income
Tax Regs.; Notice 97-60, sec. 4, 1997-2 C.B. 310, 317-318. Only
postsecondary schools may be eligible educational institutions;
therefore, elementary schools and secondary schools4 do not
qualify.
4A secondary school is “a school intermediate between
elementary school and college”. Merriam-Webster’s Collegiate
Dictionary 1052 (10th ed. 2002).
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Last modified: November 10, 2007