KOSCIUSKO, Miss. (AP) _ A timber magnate's $20 million trust fund has helped thousands of students go to college - sometimes for free. Now officials are promoting the ''extraordinary gift'' to lure industry, spur employment and keep young folks in Mississippi.

Last year, 1,500 students took advantage of the fund, set up in 1979 to give money for college to residents of five mostly rural counties. It fund was the brainchild of the late E.V. Sumners and his wife, Ginger.

''She and her husband wanted to give something back to Attala County. They wanted to help the area that had given them their income,'' said Fred George, mayor of Kosciusko, a town of 7,000 that is the seat of Attala County.

George is banking on it to persuade industries to locate in the area.

''For many businessmen, it will be just like getting a raise,'' he said. ''They can send their children to school for virtually nothing.''

Attala County, with 20,000 residents, has a diverse economy including a dairy plant, sheet metal plant and garment and tool factories.

''There is an almost immediate labor supply of 80,000 people,'' George said. ''The commute from other counties is almost nothing.''

The county has created an agro-tech enterprise zone and is offering tax incentives for industry as another part of their effort to attract investment, George said.

The Sumners Fund, set up in 1979, helps pay college expenses of any student who graduates from a high school in Attala, Carroll, Holmes, Leake or Winston county with a ''C'' average.

There is a catch to this largesse: students get help with tuition only at four Mississippi schools - Mississippi State, the University of Mississippi, Millsaps College or Wood Junior College.

The fund also will award money to medical students - including those studying nursing or other medical specialties - at the University of Mississippi Medical Center.

Officials hope the lure of a free college education will bring in new industry and stem the exodus of the area's young.

A recent survey by a the Jackson Clarion-Ledger found that less than half the students who scored highest on standardized college tests plan to stay in Mississippi. The study showed 36.3 percent definitely would leave and 14.7 percent said they might leave.

The Sumners Fund worked perfectly for Marty Myers, a dentist who was one of the first recipients. Born in Kosciusko, he graduated from the University Mississippi Medical School in 1981 and has a practice in his hometown.

''I was very fortunate to have gotten that help,'' Myers said Monday, adding that all his tuition and books and even part of his rent were paid for. ''The Sumners program is one of the greatest things ever to come out of this community.

''Nobody from any of these counties really has any excuse not to go to college now,'' he said.

''It's an extraordinary gift,'' said Audrey Lambert, director of financial aid at Mississippi State. ''We've very grateful for all that Mr. Summers and his wife have done for students.''

The schools dispense the money annually, with the amount dependent on the number of students who qualify for the grant. A student attending Millsaps in 1985-86, for example, received $5,200 for the year, covering almost all the private school's $5,400 tuition.

According to officials at Deposit Guaranty Bank in Jackson, the Sumners Trust has accumulated at least $2 million in interest annually.

''It's a very positive thing. We'd like to have more programs like this and we need to have more to keep kids in the state,'' said George Verrall, vice president of business affairs for Mississippi State and a former financial aid officer.