Beginning in 2002, what were formerly known as qualified state tuition programs have been renamed and can be established and maintained by educational institutions.

Name change. Qualified state tuition programs (QSTPs) are renamed qualified tuition programs (QTPs).

Distributions from state-maintained QTPs. A distribution from a QTP established and maintained by a state (or an agency or instrumentality of the state) can be excluded from income if the amount distributed is used for higher education. For more information, see Are Distributions Taxable in this chapter.

QTPs maintained by educational institutions. Beginning in 2002, you can make contributions to a QTP established and maintained by one or more eligible educational institutions. Any earnings distributed before January 1, 2004, will be taxable. For more information, see What Is a Qualified State Tuition Program, in this chapter.

Rollovers of QTPs to same beneficiary. Amounts in a QTP can be rolled over, tax free, to another QTP set up for the same beneficiary. However, the rollover of credits or other amounts from one QTP to another QTP for the benefit of the same beneficiary cannot apply to more than one transfer within any 12-month period for the same beneficiary.

Definition of family members. For purposes of rollovers and changes of designated beneficiaries, the definition of family members is expanded to include first cousins of the beneficiary. For more information, see Can You Transfer Amounts or Change Beneficiaries, in this chapter.

Qualified expenses. Calculation of the amount that is considered reasonable for room and board expenses has been changed. You must contact the educational institution for their qualified room and board costs. For more information, see Qualified higher education expenses in this chapter.

Special needs beneficiaries. The definition of qualified higher education expenses has been expanded to include expenses of a special needs beneficiary that are necessary in connection with that person's enrollment or attendance at an eligible institution. For more information, see Qualified higher education expenses in this chapter.

Coordination with Coverdell ESAs. You can make contributions to Coverdell ESAs and QTPs in the same year for the same beneficiary. For more information, see the Caution, later.

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