During Wednesday’s committee markup hearing on Senate Bill 335, a pending bill designed to improve 529 College Savings Plans, Senate Finance Committee Chairman Orrin Hatch (R-UT) provided a strong opening statement in support of the bipartisan legislation, which was introduced by Sen. Chuck Grassley (R-IA) earlier this year.
Citing the bipartisanship of the bill’s co-sponsors (from Sens. Pat Roberts (R-KS), Richard Burr (R-NC),John Isakson (R-GA), Tim Scott (R-SC) and Bob Portman (R-OH), to Sens. Bob Casey (D-PA), Chuck Schumer (D-NY), Ben Cardin (D-MD) and Mark Warner (D-VA), Hatch suggested that Grassley “must be onto something” with the legislation.
“This common-sense bill would make some important changes to the way that 529 education savings accounts operate,” Hatch said. “As we all know, 529 accounts are used by many families throughout the country to help pay for the costs of a college education, which, as we’ve seen, are growing more and more every year. They provide hard-working taxpayers with an efficient and cost-effective way to help provide their children with greater opportunities.”
Hatch cited data showing that over the past several years, the value and use of 529 accounts has increased dramatically. “From 2012 to 2013 alone, there was a net increase of 19.1 percent in 529 account assets,” Hatch said. “According to recent estimates, total investment by American families in 529 plans is now more than $247 billion, with the average account size calculated at $20,474 as of the end of 2014.”
The basis of Grassley’s bill would be to address three specific concerns that U.S. families and taxpayers have highlighted with the current 529 code: the failure to include computers and Internet access as a legitimate education expense, the continued existence of antiquated aggregation rules that bog down the savings process and the inability to recontribute funds to their accounts without penalty should they receive a refund. The new legislation would modernize the code, providing fixes for these issues and making it less burdensome for families to save for college.
“These are common-sense changes to the law that can make it that much more affordable for students to receive an education,” Hatch said. “That’s why the bill has garnered overwhelming bipartisan support.”
Companion legislation overwhelmingly passed in the House earlier this year, being approved by a vote of 401 to 20.
“I hope that we can see a similar result here in the Senate,” Hatch said. “My hope is that we can report this bill out of committee without amendments so we can merge it with the House bill on the floor and send it to the president’s desk so that we can get this section of the tax code working for everyday Americans trying to improve educational opportunities for the next generation.”