|HSLDA News||October 6, 2003|
Update on Education Savings Accounts Vote
The U.S. House of Representatives considered the Education Savings and School Excellence Performance Act of 2002 on Wednesday September 4, 2002. Included in this bill was a provision that would extend the use of education savings accounts to homeschoolers. The bill contained a number of other provisions, including making the education savings accounts law permanent. Unfortunately, the bill failed in the House of Representatives.
While the bill achieved a majority, 213 in favor to 188 opposed, it needed a 2/3 super majority to pass under the procedure by which the bill was brought to a vote. We will keep you informed if this bill again comes for a vote. Thanks to all who called their Congressmen in support of this bill. Click on the following link to see how your congressman voted.
Currently, some homeschoolers do not qualify for Educational Savings Accounts. Home school students qualify only in states that define homeschools as private schools. These states include: AL, CA, IL, IN, KS, KY, LA, MI, NC, NE, OH, TN, and TX. (Note: In states where more than one option is provided the homeschooler may take advantage of the ESA only if they operate under the option which establishes the homeschool as a private school.) Five other statesóCO, FL, ME, VA, WV, and UTórecognize groups of homeschoolers as private schools, but individual home schools do not qualify.
How do these education savings accounts work?
An ESA is an account in which interest and capital accumulate tax free for educational purposes. For example, upon the birth of their first child, a family invests $2,000 in an ESA. They deposit $2,000 each year until the child reaches the age of six, at which time the parents will have saved $12,000. If their money has been compounding annually at 13% during that time, they will have earned $4,645.41 of tax free money toward their child's education expenses. A little math demonstrates that the $4,645.41 in interest, divided by 12 years of education, would give parents approximately $387.12 per year to spend on their child's education.
Home school families would especially benefit from the fact that anyone, not just parents, can contribute to a child's ESA. Friends and relatives can give, as long as annual contributions do not exceed $2,000. These new provisions are effective for tax years beginning January 1, 2002.