The president’s brand of ‘middle-class economics’ isn’t working for middle-class families, and nowhere is that more apparent than in his proposal to tax college savings accounts, known as 529 plans. Instead of making it easier for students and parents to plan and save for the rising cost of tuition, the president’s proposal would have forced them to borrow even more, piling additional debt on the backs of middle-class families.
That’s why the House is taking action this week on Rep. Lynn Jenkins’ (R-KS) bipartisan plan (H.R. 529) to expand 529 college savings accounts and help families avoid the staggering student loan burden we see today:
- $1.16 Trillion: Total Amount of Outstanding Student Loan Debt.“Student loans continue to pile up, now totaling $1.16 trillion in outstanding balances, one of the main reasons researchers have cited for the low levels home ownership among young adults.” (CNBC)
- 77 Percent: Low-Income Students Who Graduate with Student Loan Debt.“[T]hose from low-income families continue to be more likely to graduate with student loans, with 77% graduating with debt in 2012, compared with 50% of their most affluent peers. And the share of low-income graduates who borrow has also increased in recent decades, rising from 67% to 77% over a period of roughly 20 years.” (Pew Research Center)
- $28,400: Average Amount of Student Loan Debt. “In 2013, seven in 10 (69%) graduating seniors at public and private nonprofit colleges had student loans. Nationally, the average debt for these graduates was $28,400…” (The Institute for College Access and Success)
- 17 Percent: Tuition Increase for Public 4-Year Colleges Under President Obama.“In the public four-year sector…The increase over the most recent five years, from 2009-10 to 2014-15, was 17%, or 3.2% per year.” (College Board)
Given the daunting challenge of paying for a college education, it is no surprise that nearly 12 million families, the vast majority of which are in the middle class, have turned to 529 plans to help secure a better future for their children.
According to a report by the Federal Reserve Bank of San Francisco, college graduates will earn more than $830,000 more over the course of their lifetimes than those with a high school diploma. And, the unemployment rate for college graduates currently stands at 2.8 percent – significantly lower than the unemployment rate for high school graduates (5.4 percent) and those without a high school diploma (8.5 percent).
“Studies have demonstrated how the existence of any sort of college savings account substantially increases the chances of a child attending college. As little as $500 in a savings plan sees children three times as likely to enroll, and four times as likely to graduate from college,” Rep. Jenkins writes in a CNBC op-ed. H.R. 529 helps by expanding, modernizing and strengthening this critical college savings tool . Learn more about the bill here.
Parents, editorial boards, and experts have all weighed in in support of 529 plans. While the president has been forced to withdraw his college savings tax hike, if he is serious about helping middle-class families he, and members of his party, will go a step further and back this bipartisan, commonsense measure.