Bill Overview
Title: Helping Parents Save for College Act of 2022
Description: This bill allows a retirement savings tax credit for contributions to any qualified tuition program (e.g., a 529 qualified tuition plan). It also permits a rollover of unused contributions to a ROTH IRA savings account.
Sponsors: Sen. Hassan, Margaret Wood [D-NH]
Target Audience
Population: people investing in college savings plans (e.g., 529 plans)
Estimated Size: 9750000
- The bill provides a retirement savings tax credit for contributions to qualified tuition programs, which will directly impact parents who are saving for their children's college education.
- The bill also allows for rollovers of unused contributions to a ROTH IRA, which could impact those with leftover educational savings who are planning for retirement.
- The primary beneficiaries are likely families who are investing in 529 plans, a common tool used by parents to save for the educational expenses of their children.
- Indirectly, future students may also benefit from increased educational savings by parents.
Reasoning
- The policy targets parents and households that use qualified tuition programs like 529 plans. Given that approximately 15% of American households have 529 plans, the policy will directly impact a significant but specific portion of the population.
- The budget constraints suggest that the policy must be cost-effective in targeting these households, offering sufficient incentives to encourage participation without overshooting financial limits.
- The potential beneficiary group is estimated at 9.75 million households, which can be seen as the upper bound given the budget.
- Indirect benefits could extend to the students due to increased college savings, although this is a longer-term impact.
Simulated Interviews
Marketing Manager (Austin, TX)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 3/20
Statement of Opinion:
- This policy makes financial sense since I am actively contributing to a 529 plan.
- I appreciate the ability to rollover unused funds into a ROTH IRA – it feels like future-proofing my investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 7 |
Software Engineer (Columbus, OH)
Age: 38 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- As someone who just started investing in a 529 plan, this policy couldn’t have come at a better time.
- Reducing the tax burden makes it more attractive to contribute more.
- ROTH IRA rollover is a compelling feature if savings are left over.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 6 |
Retired (Boston, MA)
Age: 60 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- I have always valued these kinds of savings plans for my grandchildren’s education.
- Having the option to rollover contributes peace of mind regarding my financial plans as I age.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Freelance Writer (Denver, CO)
Age: 32 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- While I’m interested in the concept, it currently has less relevance to my situation without kids.
- It might affect my decision to choose a 529 when the time comes.
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 | 6 | 5 |
| Year 20 | 6 | 6 |
Accountant (Atlanta, GA)
Age: 48 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- I see this bill as a valuable enhancement to the existing advantages of 529 plans.
- Lower taxes through credits create more wiggle room in my budget. The IRA rollover is my backup plan.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 7 |
Barista (Seattle, WA)
Age: 29 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- Frankly, this doesn’t apply to me right now since I’m not saving for college education.
- I might consider it if and when I have kids.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 5 | 5 |
Tech Developer (San Francisco, CA)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 3/20
Statement of Opinion:
- This would definitely benefit my efforts to save more and efficiently for my son’s education.
- I'm particularly interested in the rollover feature for retirement savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 8 |
High School Teacher (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- While this doesn’t affect me directly, it could provide broader societal benefits by encouraging more savings for education.
- It's a positive step towards making education more accessible.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Graphic Designer (Miami, FL)
Age: 27 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- Investing for kids’ education isn’t on my immediate horizon, but such policies make it more appealing.
- It's reassuring to know there are options like this for when I need them.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Lawyer (New York, NY)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- Having the ability to rollover leftover 529 funds into a ROTH IRA is an incentive I wish I had when my kids were younger.
- I believe it’s a great idea for those actively contributing to these plans.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $3000000000 (Low: $2500000000, High: $3500000000)
Year 2: $3100000000 (Low: $2600000000, High: $3600000000)
Year 3: $3200000000 (Low: $2700000000, High: $3700000000)
Year 5: $3400000000 (Low: $2900000000, High: $3900000000)
Year 10: $3600000000 (Low: $3100000000, High: $4100000000)
Year 100: $4000000000 (Low: $3500000000, High: $4500000000)
Key Considerations
- The uptake rate of the new policy among eligible taxpayers, as the effectiveness of the policy heavily depends on the number of people taking advantage of the tax credit.
- The potential for increased educational attainment can improve future economic outcomes and federal tax revenues.
- Potential administrative costs and requirements associated with implementing and managing the tax credit.
- Impact on state-sponsored educational savings programs, which might interact with federal provisions in unpredictable ways.