Protecting 529s and promoting a "culture of saving"
Sometimes the best legislation simply improves upon what's already working. That's what happened in the case of the popular 529 college savings program.
When the average student loan debt is $28,400 and tuition costs rise each year, it's no wonder nearly 12 million American families -- the vast majority of which are middle class -- have turned to 529 plans to prepare for their children's education.
But in his State of the Union address, President Obama proposed a plan to tax and essentially eliminate these plans. Fortunately, parents made it clear they wanted to be able to plan ahead for their children's future. The president listened and dropped his plan.
Studies show that college savings accounts, even with mere hundreds of dollars deposited, greatly encourage children to enroll and graduate from college.
That's why I supported House passage of H.R. 529, a bill which promotes saving for college by protecting, modernizing and expanding 529s.
The bill clarifies that computers -- essential tools for 21st century students -- are qualified expenses. Further, it removes unnecessary paperwork for the administrators of these plans.
The legislation also allows families to redeposit refunds from colleges back into their 529s without taxes or penalties. If a student has to withdraw early for an illness, for example, this allows the family to retain those tax-free funds that would otherwise be lost.
We should be promoting a "culture of saving" that helps parents plan for their children's future and ensure children succeed in education.
H.R. 529 passed the House with more than 400 votes -- a widely bipartisan success story. I hope the Senate and president turn this bill into a law soon.
The solution to rising tuition and overall costs in higher education won't be simple, but 529 plans are one way for American families to get ahead early and reduce financial stress.
U.S. Rep. Randy Hultgren