THE NEXT FRONTIER IN EDUCATION: TRANSFORMING 529 COLLEGE SAVINGS PLANS

In January, President Obama threw caution to the wind when he tried to throw out 529 college savings plans. In what the White House called a “simpler, fairer” reform to the tax code, the president wanted to eliminate a savings plan that includes an incentive for parents to save for their child’s college education. Meanwhile, students have amassed $1.2 trillion on college loan debt (which USA Today, in a poetic moment, called “bonkers”) and the cost of tuition at a 4-year institution has increased nearly 130 percent since 1982-83.

Fortunately, the president’s proposal to discourage saving while the cost of college goes up met with disapproval, even from his own party. The New York Times reported that Rep. Nancy Pelosi of California took time to persuade President Obama while aboard Air Force One somewhere between India and Saudi Arabia. Time on board the plane was well spent.

Currently, more than 11 million 529 college savings plans are open, totaling some $224 billion in assets. Lawmakers in more than 30 states and Washington, DC have enacted state tax advantages for accountholders. Citizens and their local lawmakers recognize the importance of the accounts and have added to the federal incentive to save for college.

The Goldwater Institute’s latest paper, The Next Frontier in Education: Transforming 529 Savings Plans into Lifelong Learning Education Savings Accounts, explains how lawmakers can do more to make the accounts useful for students and their families.

Career opportunities in computers and mathematics, health care, and business and finance are expected to increase by at least 12 percent by 2022—all jobs that require a solid K-12 experience, followed by success in college and graduate school, and professional development beyond school. For example, computer code regularly evolves and skilled workers need to stay current, as do doctors and nurses as approaches to medicine change.

529 plans’ uses should be broader and allow families to save for K-12 expenses and job training expenses after college and graduate school. We should be able to learn and save money in order to improve our skills using a 529 account at any point in our lives. Labor statistics demonstrate that adults born between 1957 and 1964 will hold almost 12 jobs between ages 18 and 48, on average. Everyone needs the ability to learn new skills and access the most current techniques in our field.

Expanding the uses of 529 accounts would help more individuals achieve the American Dream. Learning should be a lifelong activity, not one that ends with a diploma.