It’s safe to say that the college experience is different for our kids than it was for many of us. We paid thousands of dollars less per unit, bought cheap text books and left college with no debt and a head start on building our lives.
Now, as parents, we share our kids’ trepidation with sweaty palms of our own as they open college acceptance letters and we worry about how we’re going to help them pay for school. We celebrate with them as they embark on the journey of a lifetime and we know that as parents, we will make the financial sacrifices necessary to get them through to graduation day.
When it comes to footing the bill for college, middle-class families often make too much money to qualify for state and federal financial aid. This makes saving for college in advance vital.
In California, many families are using 529 accounts to put away cash. Already, about $6 billion is being saved in 529 accounts, but these accounts have an enormous potential for growth as more families discover them. We recently introduced legislation that will help families saving for college by offering a tax deduction on the money they deposit in 529 accounts. It’s a bill we hope will entice more families to save early and often. It would add our state to the list of 35 others, including New York, Colorado, New Mexico, South Carolina and West Virginia, where tax deductions are already encouraging families to save.
Today, seven million people across the country are saving for college with 529 plans. According to the College Savings Foundation, eighty percent of those families are middle-class. If passed by the legislature, Assembly Bill 209, known as the College Savings Tax Relief Act, would offer tax deductions on the amount deposited in a 529 account. With deductions of up to $3,000 for individual tax filers and up to $6,000 for married individuals filing jointly, AB 209 would help offset the high price of education. These costs will no doubt continue to soar. Our bill will incentivize middle-class families to save.
When we consider that the class of 2014 graduated with the most debt of any other class before them, the need for college savings accounts has never been more obvious. More than half of all college graduates in California get their diploma followed by a payment slip for their first loan payment.
The College Savings Tax Relief Act is California’s opportunity to help hard-working parents keep more of the money they are already saving for college. It will also help to lighten the debt burden facing graduates. We can and should make it easier for parents who want to invest in their children’s future.
Frank Bigelow (R-O’Neals), Melissa Melendez (R-Lake Elsinore), Bill Brough (R-Dana Point) and Jim Patterson (R-Fresno) are members of the California Assembly.