Bill Overview
Title: To amend the Internal Revenue Code of 1986 to expand the uses for funds under qualified tuition programs, and for other purposes.
Description: This bill expands the uses of qualified tuition program (529 plans) funds to include payment of costs related to industry recognized apprenticeship programs. It also provides for payment of expenses related to a career and technical education program or a career pathway. The bill increases from 1.4% to 1.6% the rate of the excise tax on the investment income of certain private colleges and universities.
Sponsors: Rep. Smucker, Lloyd [R-PA-11]
Target Audience
Population: Individuals and families using or eligible for 529 plans and apprenticeships globally
Estimated Size: 5000000
- Qualified tuition programs, known as 529 plans, are used by families to save for college and other educational expenses. By expanding the uses to include apprenticeships, the bill broadens the potential beneficiary pool.
- Apprenticeship programs typically attract individuals looking to enter skilled trades or technical jobs, often those who might not attend traditional four-year colleges.
- Currently, around 13 million active 529 accounts exist in the U.S. Families involved in these plans will be directly impacted if they have members interested in apprenticeships or technical careers.
- Career and technical education programs serve millions globally. In the U.S alone, organizations like Advance CTE represent state-level career and technical education programs affecting k-12 and beyond.
Reasoning
- The policy primarily benefits individuals and families with existing 529 accounts interested in using those funds for apprenticeship programs, broadening the educational opportunities beyond traditional college pathways.
- Key populations include those enrolled in or considering apprenticeships, technical education programs, and those who might take advantage of expanded 529 fund usage.
- While the increase in the excise tax could negatively impact private college costs, it likely affects a smaller segment of the population.
- Because of budget limits, the immediate impact would be on those already planning to use funds for such educational pathways, rather than enacting a widespread change across the general population.
- Considering that not all 529 account holders or their families may want or need these pathways, real impact might be observed among a more limited population initially.
- The overlap between current 529 savers and those interested in apprenticeships or technical careers is not fully clear but expected to target a significant subset of the global population using these plans.
Simulated Interviews
Parent of high school junior (Boston, MA)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- This change is beneficial for my family as my son is interested in an apprenticeship in electrical work.
- Finally, the funds we saved can be used more flexibly. It relieves some financial pressure on our future planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Apprentice welder (Pittsburgh, PA)
Age: 32 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- I think it's a great move, but it doesn't affect me directly as I didn't have a 529 account growing up.
- The expanded support for apprenticeships is promising for future entrants into skilled trades.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Corporate Manager (San Francisco, CA)
Age: 40 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 7.0 years
Commonness: 12/20
Statement of Opinion:
- This is a welcome change as my younger daughter is interested in pursuing a culinary apprenticeship program.
- The new option provides us with more flexibility in using the funds effectively.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Community College Faculty (Austin, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- While the expanded use of 529 funds is positive, I am concerned about the potential tuition increases due to the higher tax on private institutions.
- The policy might shift how technical education is perceived and funded.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Private University Administrator (Cedar Rapids, IA)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- The excise tax increase may lead us to reconsider some financial strategies to allocate costs effectively.
- It's a mixed bag, benefiting some families while pressuring our institution's budget.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Recent high school graduate (Atlanta, GA)
Age: 23 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- I think it's great that there's support for apprenticeships, but I feel left out since my family never used 529 plans.
- It might help future students but not me right now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Auto mechanic (Chicago, IL)
Age: 38 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 11/20
Statement of Opinion:
- Having more resources for apprenticeships is good for those following my career path.
- I didn't use this type of funding, but anything that supports education is positive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Financial Planner (New York, NY)
Age: 35 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 8.0 years
Commonness: 13/20
Statement of Opinion:
- Many of my clients will appreciate the expanded use of 529 plans, especially those considering non-traditional education pathways.
- The tax change might concern some clients if they are dealing with private university tuition.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Retired Engineer (Seattle, WA)
Age: 65 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 9/20
Statement of Opinion:
- I appreciate the broader options available for my grandchildren.
- The burden of saving for college is daunting, so the more flexible uses of these funds the better.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
College Student (Los Angeles, CA)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 6/20
Statement of Opinion:
- The tax might lead to higher tuition for students at private universities like mine.
- While I support more use of funds in general, I hope it won't mean paying more for my education.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 5 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $350000000 (Low: $300000000, High: $400000000)
Year 2: $350000000 (Low: $300000000, High: $400000000)
Year 3: $350000000 (Low: $300000000, High: $400000000)
Year 5: $350000000 (Low: $300000000, High: $400000000)
Year 10: $350000000 (Low: $300000000, High: $400000000)
Year 100: $350000000 (Low: $300000000, High: $400000000)
Key Considerations
- Potential shift in attractiveness of 529 plan withdrawals towards apprenticeships and technical education, which may affect traditional educational funding allocations over time.
- Excise tax increase could be transferred to students via tuition adjustments, altering financial dynamics for certain college-bound individuals.
- The long-term economic and educational landscape may shift as new pathways become financially supported, modifying career outcomes and educational choices.