Washington, DC – Colorado U.S. Senator Michael Bennet today is pushing several changes to college savings plans to make college more affordable for middle class and lower income families. Bennet filed several amendments in the Senate Finance Committee which is considering a bill to improve 529 plans today.
“Higher education is becoming a prerequisite for success in the 21st century, but it is increasingly more unaffordable and less accessible to all students,” Bennet said. “Savings plans like 529s can be a useful tool to help pay for college, but they aren’t an option for all families. These amendments would provide more opportunities for more families take advantage of savings plans and tax incentives to save for college.”
Details on Bennet’s Amendments:
• An amendment to allow families to fully exclude Pell Grants as income when filing their federal taxes.
• An amendment to create a new tax credit for contributions to 529 savings plans. It would provide a 50 percent credit for contributions up to $1,000. Up to $300 of the credit would be refundable. The credit would phase out between $54,000-$64,000 for individual filers and $108,000-$128,000 for joint filers, similar to the phase out for the Lifetime Learning Credit.
• An amendment to make the American Opportunity Tax Credit permanent and increase the maximum value to $3,000. It would provide a 100 percent tax credit for the first $2,000 of certain qualified higher education expenses and a 40 percent credit for next $2,500 of these expenses. Up to $1,800 of the credit would be refundable.
• Bennet is also cosponsoring an amendment with Senator Debbie Stabenow (D-MI) that would require the IRS and the Department of Education to develop a system to provide students and their families with an online estimate of their eligibility for federal tax credits for higher education at the same time they receive estimates of their eligibility for other federal student financial aid. The amendment would complement Bennet’s bipartisan bill to simplify the Free Application for Federal Student Aid (FAFSA) that would help families understand what federal aid is available during a student’s junior year of high school.
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