[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[Extensions of Remarks]
[Page E10]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE HIGHER EDUCATION ACCUMULATION PROGRAM ACT OF 1997

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                           HON. ANNA G. ESHOO

                             of california

                    in the house of representatives

                        Tuesday, January 7, 1997

  Ms. ESHOO. Mr. Speaker, I rise today to renew my drive to help 
parents save for their children's higher education by introducing the 
Higher Education Accumulation Program [HEAP] Act of 1997. This 
initiative, which I also introduced in the prior two Congresses, 
establishes special IRA-like savings accounts so that parents are 
motivated to save for their children's higher education.
  There is no greater investment that families can make in their future 
than giving their children a chance to pursue higher education. 
Unfortunately, tuition increases have made college unaffordable for so 
many families. As a result, families are being forced to go deeper into 
debt or tap into their life savings in order to give their children a 
chance to prepare themselves for the 21st century.
  Under my initiative, parents can deposit up to $5,000 per year tax 
deferred in a HEAP account for their child's college or other higher 
education. Only one child can be the beneficiary of each HEAP accounts. 
While multiple HEAP accounts could be established by a family, parents 
would be limited to a maximum tax deferment of $15,000 per year. 
Married parents filing separate returns would be limited to $2,500 in 
deferments per account, up to a maximum of $7,500.
  With a HEAP account, one-tenth of any amount withdrawn for 
educational expenses--including tuition, fees, books, supplies, meals, 
and lodging--at eligible institutions would be included in the gross 
income of the beneficiary for tax purposes each year over a 10-year 
period. If a person withdrew money from a HEAP account for purposes 
other than paying for higher education, that money would be subject to 
a 10-percent penalty on top of the income tax rate that would apply at 
the time of withdrawal.
  According to the Government Accounting Office [GAO], tuition at 4-
year public colleges and universities--where two-thirds of U.S. college 
students attend classes--has increased 234 percent over the past 15 
years. In contrast, median household income rose only 82 percent and 
the cost of consumer goods rose just 74 percent in the same period. GAO 
also has found that increases in grant aid have not kept up with 
tuition increases at 4-year public colleges. As a result, families are 
relying more on loans and personal finances to pay for school. For 
example, in fiscal year 1980, the average student loan was $518; in 
fiscal year 1995, it rose to $2,417, an increase of 367 percent.
  The U.S. Department of Education reports that for the 1994-95 
academic year, annual undergraduate charges for tuition, room, and 
board were estimated to be $5,962 at public colleges and $16,222 at 
private colleges. Between 1980 and 1994, college tuition, room, and 
board at public institutions increased from 10 to 14 percent of median 
family income--for families with children 6 to 17 years old. At private 
institutions, these costs increased from 23 to 41 percent of median 
family income between 1979 and 1993.
  Mr. Speaker, making higher education more affordable for more 
families must be a top priority for the 105th Congress. I urge my 
colleagues to join me in this effort to provide a much-needed helping 
hand to American families.

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