The House has a plan that will expand income equality and education access — the Senate should follow suit

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As the Senate’s tax reform plan heads to the floor for a vote, the chamber is presented with an enormous opportunity to expand school choice options for working-class and middle-income families. Including an expansion of Section 529 savings plans for K-12 tuition expenses would help millions of families save tax-free for education. It would be a powerful statement to the very taxpayers who are supposed to benefit the most from the hotly debated reform package.

Section 529 plans currently allow individuals and families to save money for their children’s college education, with earnings exempt from federal income taxes. Many states further exempt contributions to such plans from state taxation. The House of Representatives’ version of tax bill contains a provision to expand 529 plans to cover expenses for K-12 tuition in independent and religious schools, as well as for expenses related to apprenticeship programs. The Trump administration already has signaled its support.

{mosads}The House bill also wisely adds apprenticeship program expenses to qualify for 529 savings plans. The provision will enable still more families to save for this alternative to college and give more Americans the skills they need to enter the workforce.

The executive branch and the House rightly understand: if it makes sense to encourage families to save for college — and it does — then it further makes sense to encourage families to save for the best K-12 education option they can access to ensure their children are prepared for college or an alternative career path.

The Senate tax bill does contain the House provision to allow families to begin to contribute to 529 college savings plans upon pregnancy instead of birth, but nothing to help parents at the K-12 level.  

Last week, more than 75 organizations from across the country urged the congressional majority leadership to include 529 expansion in the final tax reform bill.  These organizations include Americans for Tax Reform, Heritage Action, the Faith and Freedom Coalition, Agudath Israel of America, the U.S. Conference of Catholic Bishops, the Hispanic Leadership Fund, the Thurgood Marshall College Fund, and dozens more.

When it comes to school choice, however, there are always the naysayers whose arguments continue to manifest a selfishness and vacuity that is all too familiar. 

One refrain against 529 expansion comes from the public school teacher unions and the education complex at large, which incessantly claim that any school choice incentive or benefit somehow takes money from public education. The National Education Association, for example, speciously claimed that expanding 529s somehow would “hurt neighborhood public schools and students.” This zero-sum argument by the NEA and others is unfounded and bogus.

The House 529 expansion would cost on average only $60 million a year, compared to the now $700 billion spent on public education each and every year, the latter according to numbers from the NEA itself.

Another argument against expanding 529 plans — almost humorous — contends that encouraging families to use 529 savings for K-12 tuition would mean they have less for college. This mathematical truism would be well understood by the many families who choose to expend their savings on their children’s education before college, which actually is an argument to expand 529s, not against doing so.

Millions of low-income to middle-class families are struggling financially to access educational options for their children, particularly religious school options central to their faith and a child’s upbringing. For those elected officials committed to the idea of doing something about income equality, the best policy toward that end would be to empower non-wealthy Americans to have the education options they want for their children. That will ensure the next generation is better equipped to prosper in a 21st century economy.

Excluding a K-12 529 expansion in the final tax bill would be an huge missed opportunity for Congress and the Trump administration to fulfill a promise to families to access more educational options.

Senators should run with the House plan. Such a policy is simple, helpful and necessary to better enable families to provide the best education and workforce preparation for their children.  

Peter Murphy is vice president for policy at the Invest in Education Foundation, a research and policy not-for-profit 501(C)(3) and publicly-supported organization with a mission of promoting improvement in K-12 education, increasing educational choice and working to close gaps in educational achievement.

Tags 529 plan college savings Education House tax plan School choice Senate tax plan

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