Date: 2015-02-25
Speaker: DANNY K. DAVIS (democrat)
Chamber: H
State: Illinois

Mr. Chairman. I yield myself such time as I may consume. I am a strong supporter of 529 college savings plans. When I cochaired the Education and Family Tax Working Group with Representative DIANE BLACK from Tennessee during the 113th Congress. we heard from education stakeholders that education tax benefits should reflect a threelegged stool with one leg helping families save for college. one leg helping families pay for college. and one leg helping families repay college. College is. indeed. expensive. and it is a wise public investment to use Federal incentives to encourage families to save for college. H.R. 529 makes three important improvements to 529 accounts: one. it makes computer technology an allowable expense. two. it improves the calculation for taxing distributions to better reflect ones earnings. and. three. it allows distributions that are refunded by a college upon a students withdrawal to be reinvested in 529 accounts within 60 days without being subject to a tax. I support these important improvements to 529 education plans. In addition. I hope that the Republican leadership will advance the bills sister bill. the Savings Enhancement for Education in College Act. which was H.R. 529 in the last Congress and also championed by Representatives JENKINS and KIND. This former H.R. 529 bill includes the two substantive improvements to 529s that advocates explain would best help middleincome families save more for college. We know that low- and moderateincome families have a harder time saving for college because they have less extra cash available to put away in a savings account. The Savings Enhancement for Education in College Act would substantially help low- and middleincome families save by allowing lowincome taxpayers to take advantage of the savers credit and allowing employers to match up to $600 a year in 529 contributions. I think that these provisions are excellent. The savers credit currently helps offset part of the first $2.000 that lowincome workers voluntarily contribute to IRA and 401(k) plans. Extending this tax benefit for 529 plans is a commonsense way to help increase college savings by low- and moderateincome families. Further. I think that the employer match is an especially promising tool to improve college savings by lowerincome Americans because it adds $600 a family didnt have for college before that can grow and support education over time. These two improvements are needed because the savings data show that 529 savings have dropped tremendously since 2009. From 2005 to 2009. around 60 percent of the accounts saw contributions. however. in the last few years. the account contributions have been closer to 45 percent. I am a bit surprised that these substantive improvements are not included in the bill before us today. and I truly hope that Republican leadership will advance these 529 provisions that would tremendously improve savings for lower- and middleincome Americans. In the interest of fairness. I also hope that we make computer technology an allowable expense for the American opportunity tax credit. Currently. computers and software are not qualified expenses for the AOTC. and I think that the definition of qualified expenses should be uniform across 529s and AOTC benefits. These are all great improvements that have. in fact. been made. I reserve the balance of my time.