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On February 9, Rep. Tim Walberg (R-MI) introduced H.R. 999 to amend the internal revenue code of 1986 to expand access to Coverdell education savings accounts. This bill has bipartisan support and will help millions of Americans struggling to pay for education. The bill was referred to the House Committee on Ways and Means.
Nearly, 66 percent of all student loans are federally subsidized. American students can’t afford college tuition, and they turn to the federal government who offers them loans, regardless of whether it is makes financial sense for them.
The bill affirms college tuition is on the rise,“in-State tuition at a public 4-year universities is 34 percent higher than it was a decade ago and more than twice as high as it was 20 years ago. The price of private nonprofit 4-year institutions has increased 24 percent during the last 10 years and 51 percent during the last 20 years.”
In a recent press release, Rep. Walberg said, “Obtaining a degree provides such a valuable foundation for our children’s future and a successful career. As the mounting cost of higher education puts a strain on family budgets, we must tackle this challenge and give Michigan families greater flexibility to plan and save for college. The Helping Families Save for Education Act is an important bipartisan step to help expand saving opportunities as students pursue the best path for their education.”
In the same release, Rep. Dan Kildee (D-MI) stated, “Our competitiveness in a global economy relies on ensuring Michiganders can afford to go to college. Allowing families to save more money is one of the ways we can make higher education possible.”
This bill will help address the rising cost of education by incentivizing savings and providing individuals the tools to combat the high cost of education without relying totally on government assistance. Expanding contribution limits on Coverdell Education Savings Accounts from $2,000 to $10,000 will allow families and students to save more tax-free money that can be used on tuition, books, and other educational expenses.
The cost of college tuition has more than quadrupled since the Department of Education was established. With the federal government offering easy credit to students who assume that it must be a good investment, it is inevitable that college tuition will continue to increase rapidly.
According to the bill, “approximately 61 percent of students who earned bachelor’s degrees from public and private nonprofit institutions at which they began their studies graduated with debt. These students borrowed an average of $28,100, an increase of 8.9 percent compared to 5 years ago and an increase of 18.1 percent compared to 10 years ago.”
The federal government adversely influences the market and has increased the cost of college tuition over the years. This bill will make college more affordable by encouraging students and families to save through education savings accounts. By increasing the age from 18 to 22 in which contributions to a savings account can be made this bill will allow students to save while in school. It is imperative that we allow students to save for their futures and create even more options to pursue higher education.
Education savings accounts are a no-brainer and a step in the right direction.