COLLEGE SAVINGS 101

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Should 529 plans be able to cover pre-K through 12 expenses?
http://www.savingforcollege.com/articles/jeb-bushs-education-plan-and-what-it-means-for-529s-890

Posted: 2016-01-19

by Kathryn Flynn

Republican presidential candidate Jeb Bush thinks so. In fact, his new education plan proposes converting 529 college savings plans into Education Savings Accounts that can be used to pay for private elementary school and high school. He announced the plan on this year's Martin Luther King Jr. holiday because he believes education is "the civil rights issue of our time", and he feels his proposal offers more choices and better access to quality education for low-income families.

Education is not a new focus for Bush. In fact, he was known as Florida's "education governor" during his 1999-2007 term, when he successfully launched the Florida Tax Scholarship Program that allowed students to use publicly funded tax credits to pay for private school, and founded the state's first charter school. He plans to continue this focus on education if he is elected president this year, but will face strong opposition from teacher's unions and other Democrats for suggesting the idea of using federal tax dollars to fund private education.

But Bush claims his proposal will give more students an opportunity to succeed. "The American Dream - the idea that anything is possible through hard work - is threatened by an education system failing to prepare the next generation of children for success," he says.

By converting 529 plans into Education Savings Accounts, families would be able to choose an early childhood, elementary or high school based on their individual needs. And of course, a solid educational foundation during these years can ultimately help prepare a student for college. These plans would also allow states to grant $2,500 each year to children under five years old who are from low-income families, and allow tax-deducible contributions to their accounts.

Currently, families can save for K-12 expenses with a Coverdell Education Savings Account, but there are income limitations and contributions cannot exceed $2,000 per year per child. You can compare education savings options here.

RELATED: Top 5 mistakes to avoid when using a Coverdell ESA

Bush's proposed Education Savings Accounts would include a $50,000 line of credit for high school students to spend toward education and skill training. For every $10,000 borrowed, students would have to repay with 1 percent of their income for 25 years. Like his opponent Sen. Marco Rubio (R-Fla.), Bush wants the federal government to provide more help with paying for career-orientated education, including online certificates and apprenticeships.

The new proposal also includes the following initiatives, covers issues relating to early childhood students all the way through college graduates with existing student loan debt:

  • Allow low-income families to use Title 1 funds to pay for a school of their choice, and allow these federal dollars to follow the child to a new school.
  • Double federal support for charter schools.
  • Reward schools where teachers achieve good results for low-income students.
  • A new, more transparent income-based repayment system for federal student loans.
  • Allow private student loan debt to be discharged by bankruptcy.
  • Extend student loan debt repayment period.

RELATED: How Obama's new FASFA rules will change college savings

Republican presidential candidate Jeb Bush thinks so. In fact, his new education plan proposes converting 529 college savings plans into Education Savings Accounts that can be used to pay for private elementary school and high school. He announced the plan on this year's Martin Luther King Jr. holiday because he believes education is "the civil rights issue of our time", and he feels his proposal offers more choices and better access to quality education for low-income families.

Education is not a new focus for Bush. In fact, he was known as Florida's "education governor" during his 1999-2007 term, when he successfully launched the Florida Tax Scholarship Program that allowed students to use publicly funded tax credits to pay for private school, and founded the state's first charter school. He plans to continue this focus on education if he is elected president this year, but will face strong opposition from teacher's unions and other Democrats for suggesting the idea of using federal tax dollars to fund private education.

But Bush claims his proposal will give more students an opportunity to succeed. "The American Dream - the idea that anything is possible through hard work - is threatened by an education system failing to prepare the next generation of children for success," he says.

By converting 529 plans into Education Savings Accounts, families would be able to choose an early childhood, elementary or high school based on their individual needs. And of course, a solid educational foundation during these years can ultimately help prepare a student for college. These plans would also allow states to grant $2,500 each year to children under five years old who are from low-income families, and allow tax-deducible contributions to their accounts.

Currently, families can save for K-12 expenses with a Coverdell Education Savings Account, but there are income limitations and contributions cannot exceed $2,000 per year per child. You can compare education savings options here.

RELATED: Top 5 mistakes to avoid when using a Coverdell ESA

Bush's proposed Education Savings Accounts would include a $50,000 line of credit for high school students to spend toward education and skill training. For every $10,000 borrowed, students would have to repay with 1 percent of their income for 25 years. Like his opponent Sen. Marco Rubio (R-Fla.), Bush wants the federal government to provide more help with paying for career-orientated education, including online certificates and apprenticeships.

The new proposal also includes the following initiatives, covers issues relating to early childhood students all the way through college graduates with existing student loan debt:

  • Allow low-income families to use Title 1 funds to pay for a school of their choice, and allow these federal dollars to follow the child to a new school.
  • Double federal support for charter schools.
  • Reward schools where teachers achieve good results for low-income students.
  • A new, more transparent income-based repayment system for federal student loans.
  • Allow private student loan debt to be discharged by bankruptcy.
  • Extend student loan debt repayment period.

RELATED: How Obama's new FASFA rules will change college savings

 

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