Push to Expand 529 Accounts Moves to Senate
by Maggie McKneely • May 30, 2019
Want to use more of your own money on educational expenses? The House of Representatives says “no,” but there’s still hope in the Senate for legislation that will help make this idea a reality.
The proposed law focuses on 529 savings plans.
When they were first created, 529 savings plans were designed to help families set aside money for their kids’ future college tuition. In the 2017 Tax Cuts and Jobs Act, those plans were expanded to allow for spending on K-12 tuition.
Like a Coverdell Education Savings Account, 529 plans are not tax credits, tax deductions, vouchers, or government grants. They simply allow people to save more of their own money for educational expenses by putting that money away into a tax-advantaged savings account.
But in the 2017 expansion of how 529 plans can be used, the only students who benefited were those with tuition payments—i.e. private school students and those taking extracurricular classes. Several members of Congress have since been working to further expand the plans so that all families—public, private, and homeschool—can use them for K-12 educational expenses, rather than just tuition.
Recently, Congress had the opportunity to approve a plan that would do just that. The provision, called the Student Empowerment Act, was included in H.R. 1994 and, in a rare show of bipartisanship, passed unanimously out of the House Ways and Means Committee in late April.
But then certain special-interest groups met with House Speaker Nancy Pelosi, who then ordered that the 529 provision be stripped from the bill before it was voted on by the full House of Representatives. Instead of listening to the thousands of American families who want more flexibility over how they use their savings, the House ended up bowing to the will of well-funded and powerful special interests and passed H.R. 1994 without the expansion.
But the fight over 529s isn’t over—the bill now sits in the Senate, where Senator Ted Cruz and allies are fighting to include the provision in their version of bill.
If you want to help support increased freedom over how to use these savings accounts, you can call your senator today and voice your support for the Student Empowerment Act.