U.S. Sen. Chuck Grassley (R-IA) today encouraged state treasurers to explain the merits of the Section 529 college savings plans that are so popular nationwide. State treasurers generally administer the plans. Grassley has a pending bipartisan bill that would add flexibility to these college spending plans.
“I encourage you all to speak with the senators of your respective states and urge them to join on as a cosponsor,” Grassley said in remarks today to the National Association of State Treasurers. “You all know better than anyone just how families benefit and who uses these plans in your state. These insights are important for helping members understand just how effective 529 accounts have been in helping middle class families save for college. I look forward to continuing to hear your ideas on how to continue the success of this program and help families make college with less debt a reality.”
More information on Grassley’s bill is available here. Grassley’s remarks to the state treasurers follows.
I am glad to be here today to discuss 529 college savings plans and bipartisan legislation I am sponsoring to build upon their success.
529 plans have long had strong bipartisan support. When state-administered college savings plans were officially recognized in the tax code in 1996, it was accomplished through the bipartisan efforts of Senator Bob Graham of Florida and Senator McConnell, who today of course is the Majority Leader.
Since then, efforts to enhance the attractiveness of 529 accounts have also had bipartisan support with little to no opposition. This included making distributions for college expenses tax free. This was an effort I was glad to oversee as then-Chairman of the Senate Finance Committee.
Given this, members of Congress on both sides of the aisle were shocked when the President proposed to once again make distributions from 529 accounts taxable.
The President quickly backtracked on this proposal, and rightly so given what 529 accounts mean to so many middle class Americans. 529 accounts provide an avenue in which parents may send their child to college without incurring a crushing amount of debt that too many college graduates face today as they start their careers.
I am sure I don’t have to tell you here in the room today this, but the contention from critics that 529 accounts benefit the wealthy simply does not square with reality. One reason I think the President’s proposal was immediately criticized by members of Congress on both sides of the aisle is because we all heard through communications with our constituents back home that the typical family with a 529 account is one with modest means. We hear about how they have scrimped and pinched pennies so they could put money away for their child’s college.
I am sure everyone in this room has heard stories or perhaps even worked directly with families who are contributing whatever they can to a 529 plan to ensure their child can attend a university or college of their choice. Sacrificing today so that our children will have opportunities tomorrow is as American as apple pie. This is something we should promote not discourage.
For anyone in this room who has feared the President’s proposal was a sign of decreasing support of 529 accounts, I want to make it clear this is not the case. In fact, ironically the President’s proposal has actually had the opposite effect by galvanizing supporters from across the political spectrum.
Look no further than legislation that has been introduced in both the House and Senate to enhance and improve 529 plans. Just a month ago, Congresswoman Jenkin’s 529 bill passed the House with overwhelming support by a vote of 401 to 20. Companion legislation I introduced with Senator Casey in early February has also garnered significant bipartisan support.
Importantly, my bill has strong bipartisan support among Senate Finance Committee members. In addition to Senator Casey and myself, four Republican members of the Finance Committee and three Democratic members of the Finance Committee have signed on as cosponsors of our legislation. I also am pleased to report that last Thursday, an amendment I proposed to prioritize the consideration of a 529 bill was adopted without opposition to the Senate budget resolution currently on the Senate floor.
Given the broad support for my 529 bill in the Finance Committee, and its inclusion in the Senate budget, I am hopeful that the Finance Committee will bring it up in the coming months. I encourage you all to speak with the senators of your respective states and urge them to join on as a cosponsor. You all know better than anyone just how families benefit and who uses these plans in your state. These insights are important for helping members understand just how effective 529 accounts have been in helping middle class families save for college.
I look forward to continuing to hear your ideas on how to continue the success of this program and help families make college with less debt a reality.