A bipartisan bill cosponsored by U.S. Sen. Susan Collins (R-ME) would encourage American families to invest in a 529 education savings account, which could be used to pay for a two- or four-year college education or vocational school.
“Education plays a vital role in opening the doors of opportunity to all Americans, but the rising cost of a college education threatens to close those doors to many families across the country,” Sen. Collins said last week. “529 plans are a great option for parents to save for college expenses.”
The Helping Parents Save for College Act of 2022, S. 4103, which Sen. Collins cosponsored on April 28 with bill sponsor U.S. Sen. Maggie Hassan (D-NH), would provide tax cuts for families who save for college and allow them to roll unused college savings into a child’s retirement account, according to a bill summary provided by the lawmakers.
Specifically, S. 4103 would incentivize lower- and middle-income families to invest in 529 college saving accounts by providing a tax credit that covers 50 percent of low- and middle-income families’ contributions, the summary says.
Additionally, the bill would allow families who do not use the funds in their 529 accounts to roll those dollars into a Roth IRA retirement account so that if a child does not choose to attend college, families could still take advantage of the savings.
“Uncertainty about whether their children will choose to pursue post-secondary education years in the future can be a deterrent to opening and investing in an account,” said Sen. Collins. “Our bipartisan bill would address this barrier by improving the flexibility of 529 plans for low- and middle-income households, helping more parents to financially prepare and more children to achieve their dreams.”
The Finance Authority of Maine (FAME) and the Alfond Scholarship Foundation support S. 4103, which has been referred for consideration to the U.S. Senate Finance Committee.
“The high cost of higher education is hurting families’ bottom lines and standing in the way of students’ success,” said Sen. Hassan. “That’s why Senator Collins and I introduced bipartisan legislation that takes commonsense steps to make it easier for families to save for their child’s education, including by cutting taxes for families who put away money for college.”