Getting a federal voucher program for school choice is slow going. Those who support the voucher idea have a plan in mind that could be implemented quicker. This plan involves expanding what are called 529 plans people can use to save for college to include K-12 schools as well.
529 plans are called that because of the federal tax code section that made them possible. The 529 plans work similarly to 401(k) and IRA plans. These plans allow families to make deposits to a savings account designated for college and receive either a tax credit or deduction. Each state can set up their own plan so plans will differ from state to state.
Only college expenses can be paid out of 529 plans at this time. The 529 plans are not the only option available for school choice proponents. A type of account called Coverdell accounts is another option. This option does let families save funds for kindergarten through college. The downfall with these accounts is that they are capped at $2000. This severely limits how much families can save for their children’s education.
School choice supporters want to see this change to include all levels of education down to kindergarten for the 529 plans and lift the cap on the Coverdell accounts. A bonus in doing this is that it doesn’t involve the creation of a new federal program, which the school voucher program will do, but rather expands existing programs, which is a desire of conservatives.
Expanding these programs has strong support from Rep. Luke Messer, an Indiana Republican. He has a bill introduced in Congress that will expand 529 plans to include K-12 and lift the Coverdell caps. A think tank favored by conservatives, The Heritage Foundation also supports the changes to these options.
One idea being considered is a federal tax credit scholarship. This would give donors, both individuals, and corporations, a tax credit for donating to organizations that grant scholarships to students. Lindsey Burke from the Heritage Foundation believes the downside to this idea could be unnecessary intrusiveness by the federal government. It could also create problems in states that already have similar scholarships of their own.
Though it would seem like these are great options, there is opposition to them. The Center for Advocacy senior director at the National Education Association, Mary Kusler, says none of these plans would benefit the families that most need the help. Burke agrees that the 529 plans and the Coverdell accounts would not be helpful to families unable to put much if anything aside in them and would like to see these plans as part of a pairing with Title 1 funds that would allow disadvantaged children go to the school of their choice, even a private school.
The changes needed in the 529 plans and the Coverdell accounts are not likely to happen very soon. Change may have to wait until they can be made part of the tax overhaul Republicans are working on. It is worth staying alert and following to find out how it goes with making school choice a reality.
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