Hoping to help families save more for college, a bipartisan bill introduced by U.S. Sen. Richard Burr (R-NC) on Tuesday would give low- and middle-income families access to new tax-advantaged tools to pay for the high cost of higher education.
Under the Boost Saving for College Act, contributions to college savings accounts, or 529 accounts, would qualify for the Saver’s Credit that already applies to retirement account contributions for low- and middle-income households. The Saver’s Credit is a tax credit that provides a savings match of as much as $1,000 for single filers and $2,000 for joint filers for retirement.
Employers could also match employee contributions to their college savings accounts up to $1,000, and that amount would be deducted from gross income and applicable taxes.
“College savings accounts are a great way to safely put away money to ensure a better future for your child,” Burr said.
With the cost of earning a degree at a four-year institution typically running close to $100,000, college savings accounts can help many families take on less debt.
“I have long advocated for making college more affordable through several bills, such as the legislation to reduce interest rates for student borrowers I authored with Sen. Angus King (I-ME),” Burr said. “The Boost Act is a common sense bill that will give families more options for preparing their children for college without going into endless debt.”
The Boost Saving for College Act would allow 529 account funds to be rolled over into a Roth IRA account if a child elects not to go to college, is awarded scholarships or doesn’t use the full balance. Also, parents of children with disabilities could roll 529 accounts into Achieving Better Life Experience (ABLE) accounts without penalty.
Burr introduced the Boost Saving for College Act along with U.S. Sens. Lisa Murkowski (R-AK) and Bob Casey (D-PA).
“An affordable college education is the firmest path to the middle class and a family sustaining income,” Casey said. “Congress needs to do all it can to address the challenges that many families face in saving and paying for college.”