[Congressional Record Volume 145, Number 8 (Tuesday, January 19, 1999)]
[Senate]
[Pages S370-S375]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SESSIONS (for himself, Mr. Graham, Mr. Mack, Mr. Abraham, 
        Mr. Cochran, and Mr. Coverdell):
  S. 13. A bill to amend the Internal Revenue Code of 1986 to provide 
additional tax incentives for education; to the Committee on Finance.


          Collegiate Learning and Student Savings (CLASS) Act

  Mr. SESSIONS. Mr. President, I rise today to discuss the concept of 
prepaid tuition plans and why they are critically important to 
America's families.
  As a parent who has put two children through college and who has 
another currently enrolled in college, I know first-hand that America's 
families are struggling to meet the rising costs of higher education. 
In fact, American families have already accrued more college debt in 
the 1990's than during the previous three decades combined.
  The reason is twofold: the federal government subsidizes student debt 
with interest rate breaks and penalizes educational savings by taxing 
the interest earned on those savings.
  In recent years, however, many families have tackled rising tuition 
costs by taking advantage of pre-paid college tuition and savings 
plans. These plans allow families to purchase tuition credits years in 
advance.
  Mr. President, 39 states, like my home state of Alabama, along with a 
nationwide consortium of more than 100 private schools, have 
established these tuition savings and prepaid tuition plans. These 
plans are extremely popular with parents, students, and alumni. They 
make it easier for families to save for college, while at the same time 
taking the uncertainty out of the future cost of college.
  Congress has supported participating families by expanding the scope 
of the pre-paid tuition plans and by deferring the taxes on the 
interest earned until the student goes off to college.
  Mr. President, today, I along with Senators Bob Graham, Connie Mack, 
Paul Coverdell, Spencer Abraham, and Thad Cochran are introducing ``The 
Collegiate Learning and Student Savings (CLASS) Act'', a common sense 
piece of legislation which could help more than 30 million students 
afford a college education.
  The CLASS Act will make the interest earned on all education pre-paid 
plans completely tax-free.
  Currently, the interest earned by families saving for college is 
taxed twice. Families are taxed on the income when they earn it, and 
then again on the interest that accrues from the savings.
  On the other hand, the federal government subsidizes student loans by 
deferring interest payments until after graduation. It is no wonder 
that families are going heavily into debt and at the same time are 
struggling to save for college. We strongly believe that this trend 
must no longer continue.
  In order to provide families a new alternative, The CLASS Act will 
provide tax-free treatment to all pre-paid savings plans.
  This bipartisan piece of legislation is sound education and tax 
policy that provides incentives for savings rather than bureaucratic 
solutions. For a small cost, the CLASS Act will provide billions in 
potential savings to help families afford a college education.
  Mr. President, many individuals have questioned whether these plans 
will benefit all types of students. Let me say this, it is wrong to 
assume that tuition savings and prepaid plans benefit mainly the 
wealthy. In fact, the track record of existing state pre-paid plans 
indicates that working, middle-income families, not the rich, benefit 
the most from pre-paid plans.
  For example, families with an annual income of less than $35,000 
purchased 62 percent of the prepaid tuition contracts sold by the State 
of Pennsylvania in 1996. And the average monthly contribution to a 
family's college savings account during 1995 in Kentucky was $43.
  Tax free treatment for prepaid tuition plans must become law. The 
federal government can no longer subsidize student debt with interest 
rate breaks and penalize educational savings by taxing the interest 
earned by families who are desperately trying to save for college. If 
these goals are achieved, the federal government would no longer be 
penalizing families for saving but rather be providing families with 
help they need to meet the cost of college through savings rather than 
through debt.
  Mr. President, this legislation has received a tremendous amount of 
support from the colleges and universities, higher education 
associations, as well as several public policy think tanks. These 
include: The Career College Association, the National Association of 
Independent Colleges and Universities, the American Council on 
Education, the State of Virginia's Prepaid Education Program, The 
Heritage Foundation and Citizens for a Sound Economy.
  The idea of tax-free treatment for prepaid tuition plans has also 
been endorsed by the Washington Post, Time Magazine, and the Birmingham 
News.
  Mr. President, in particular, I would like to call my colleagues 
attention to a September 25, 1998 Heritage Foundation report, authored 
by Rea Hederman, a Research Analyst in the Domestic Policy Department 
at Heritage. This shows that over 30 million children stand to benefit 
from expanded education savings accounts and tuition prepayment plans. 
I'd encourage my colleagues to review the Heritage report, which breaks 
down these numbers by both State and Congressional district.
  Mr. President, I would also like to ask that a copy of this report be 
printed in the Record at the conclusion of my remarks.
  I would also like to acknowledge the efforts of my good friend 
Congressman Joe Scarborough, who has introduced the House companion to 
the CLASS Act, H.R. 254.
  Mr. President, the time to act is now. I encourage my colleagues to 
push for this common sense piece of legislation. This Congress should 
call on the leadership of both Houses, to make this legislation, which 
cold help more than 30 million students afford a college education, a 
part of any tax bill we consider this year.
  Mr. President, I ask unanimous consent that a report and letters of 
support be printed in the Record.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                       National Association of    
                                              Independent Colleges


                                             and Universities,

                                                  August 25, 1998.
     Hon. Jeff Sessions,
     U.S. Senate, Washington, DC.
       Dear Senator Sessions: On behalf of the over 900 
     independent colleges and universities that make up the 
     National Association of Independent Colleges and 
     Universities, I want to express our support for your 
     continued efforts to allow private colleges and universities 
     to establish prepaid tuition plans that would enjoy the same 
     tax treatment and preferences as state sponsored plans. We 
     agree that legislation is desperately needed to allow 
     students and families who want to utilize prepaid tuition 
     plans to dedicate the funds to the institution of their 
     choice. Your legislation allowing private colleges and 
     universities to compete on a level playing field in the tax 
     arena is absolutely necessary and fair.
       We look forward to continuing to work with you and your 
     colleagues in both the House and Senate to push for the 
     inclusion of tax relief for private pre-paid tuition programs 
     in tax legislation expected before the 105th Congress 
     adjourns. This issue is a top tax priority for independent 
     higher education and we certainly support your efforts.
       Again, thank you. Please do not hesitate to contact me if 
     and when I can be of further assistance on this or any issue 
     of importance to independent higher education.
           Sincerely,
                                                  David L. Warren,
                                                        President.

[[Page S371]]

     
                                  ____
         Commonwealth of Virginia, Higher Education Tuition Trust 
           Fund, Richmond, VA,
                                               September 16, 1998.
     Hon. Jeff Sessions,
     The U.S. Senate, Washington, DC.
     Re: Virginia prepaid education program--support of S. 2425.
       Dear Senator Sessions: Thank you for your continuing 
     support of legislation to encourage college savings through 
     qualified tuition programs like the Virginia Prepaid 
     Education Program (``VPEP''). VPEP now represents over a 
     third of a billion dollars pledged to the futures of more 
     than 21,000 children, and we are about to begin our third 
     enrollment period on October 1.
       In our continuing efforts to make a college education more 
     accessible and affordable for families, we very much 
     appreciate your sponsorship of S. 2425, the Collegiate 
     Learning and Student Saving Act, which would provide an 
     exclusion from gross income of interest earnings on qualified 
     tuition programs like VPEP.
       VPEP strongly supports an exclusion from gross income for 
     earnings on qualified tuition program accounts. This tax 
     treatment would be less burdensome to administer than current 
     tax provisions, and would result in better compliance and 
     less cost to the programs and their participants. More 
     importantly, an exclusion from gross income would provide a 
     powerful additional incentive for families to save early for 
     college expenses.
       Please do not hesitate to contact me or my staff should you 
     need any additional information or have any questions. Thank 
     you for your continued interest in and support of qualified 
     tuition programs and the hundreds of thousands of children 
     for whom college is now an affordable reality.
           Sincerely,
                                                  Diana F. Cantor,
     Executive Director.
                                  ____

         Enterprise State Junior College, Enterprise AL,
                                                  October 1, 1998.
     Hon. Jeff Sessions,
     U.S. Senate, Washington, DC.
       Dear Senator Sessions. I have reviewed S. 2425 with a great 
     deal of enthusiasm. I believe that it is a much needed piece 
     of legislation. It will certainly help many Alabamians who 
     are struggling to secure a college education for their 
     children.
       Several members of the Enterprise State Junior College 
     family are participants in the Alabama Prepaid College 
     Tuition Program. I know that they will be pleased to learn 
     that those hard earned funds may soon be exempted from the 
     Internal Revenue Code of 1986. Likewise, I am sure that 
     citizens in Florida, Georgia and Kentucky will be 
     appreciative for the protection that the bill will afford 
     them.
       Senator Sessions, this type legislation clearly 
     demonstrates both your leadership and sensitivity to the 
     needs of Alabama citizens. As the state legislative contact 
     person for the American Association of Community Colleges, I 
     will encourage my colleagues to support and petition our 
     friends nationwide to encourage passage of the language.
           Sincerely,
                                             Stafford L. Thompson,
     President.
                                  ____

                                               Samford University,


                                               Birmingham, AL,

                                                  August 14, 1998.
     Hon. Jeff B. Sessions,
     U.S. Senator, Washington, DC.
       Dear Jeff: I was delighted to learn of your sponsorship of 
     legislation which would clarify Section 529 so that 
     appropriate securities statutes apply to prepaid tuition 
     plans for private institutions in S. 2425, The Collegiate 
     Learning and Student Savings (CLASS) Act of 1998.
       As you may know, Samford University has joined with nearly 
     sixty independent institutions of higher education to form a 
     consortium which is working hard to establish the first 
     nationwide prepaid tuition program geared to American 
     families who want to enroll their children at independent 
     institutions. We are convinced this plan will offer millions 
     of future students and their families a convenient and 
     affordable method to save for college. Moreover, our 
     institutions will be able to offer future tuition at current 
     or discounted-current rates.
       In addition, I believe it is important to secure tax 
     treatment for prepaid tuition plans for private institutions, 
     similar to that currently offered to state-sponsored tuition 
     plans. Such tax treatment is essential to the success of our 
     efforts by making these programs more economically 
     attractive.
       I continue to appreciate all that you are doing for our 
     state and thank you for your leadership on this proposal and 
     your commitment to American higher education. If I can be of 
     further assistance as you move forward, please do not 
     hesitate to contact me.
           Very sincerely yours,
                                                  Thomas E. Corts,
     President.
                                  ____

                                      Birmingham-Southern College,


                                               Birmingham, AL,

                                                   August 5, 1998.
     Hon. Jeff Sessions,
     Russell Senate Office Building, Washington, DC
       Dear Jeff: I am writing to personally thank you for your 
     continued efforts to bring about legislation to allow private 
     college prepaid tuition plans. The introduction of your and 
     Senators Coverdale, Graham and McConnell's ``Colleagiate 
     Learning and Student Savings Act'' is a valuable step in the 
     right direction to allow parents and students to save for all 
     of their educational needs, both public and private. I 
     applaud your efforts to include the tax-exempt status of 
     earnings on prepaid tuition plans that is in the bill. 
     Obviously, this will help students and families be better 
     able to afford college.
       We certainly need a national prepaid tuition plan. As you 
     know, Birmingham-Southern College is one of more than sixty 
     private institutions willing to take the responsibility for 
     establishing a plan if it could be permitted by your 
     legislation. Most importantly, the private college prepaid 
     college tuition plan should be good for the nation, and only 
     the national plan lowers costs without lowering the quality 
     of the best system of higher education in the world.
       We at Birmingham-Southern, stand ready to assist you in 
     getting S. 2425 passed. Please let us know what we can do to 
     assist. Again, thank you for your commitment to higher 
     education.
           Sincerely,
                                                    Neal R. Berte,
     President.
                                  ____


                       [From Time, Dec. 7, 1998]

New Way To Save--State College-Saving Plans Offer Tax Advantages to All 
               and Can Be Used at Any School in the U.S.

                           (By Daniel Kadlec)

       The best college-savings program you never heard about 
     keeps getting better. As you think about year-end tax moves, 
     consider dropping some cash into a state-sponsored plan where 
     money for college grows tax-deferred and may garner a fat 
     state income tax exemption as well. This plan is relative new 
     and often gets confused with more common prepaid-tuition 
     plans, in which you pay today and attend later--removing 
     worries about higher tuition in the future. Savings plans are 
     vastly different and in most cases superior because they are 
     more flexible.
       Prepaid plans offer tax advantages, and some are portable, 
     but many still apply only to public colleges within the 
     taxpayer's state. What if Junior gets accepted to Harvard? 
     You can get your contributions back. But some states refund 
     only principal, beating you out of years' worth of investment 
     gains. And state prepaid plans make it tougher to get student 
     aid because the moneys is held in the student's name. With 
     savings plans the money is in a parent's name, where it 
     counts less heavily in student-aid formulas--and you can set 
     aside as much as $100,000 for expenses at any U.S. college.
       Both the prepaid and the college-savings plans vary from 
     state to state. Check out the website collegesavings.org for 
     details. It's a fast-moving area. In the next few months, 
     eight states will join the 15 that already have state 
     college-savings programs. Those are mostly in addition to the 
     19 that have prepaid-tuition plans. Only Massachusetts will 
     probably offer both.
       Most of the newer savings plans make contributions 
     deductible against state taxes. New York, for example, 
     launched its plan two months ago. It permits couples to set 
     aside up to $10,000 a year per student and lets New York 
     residents deduct the full amount from their income on their 
     state return. Missouri will approve a tax-deductible savings 
     plan in December. Minnesota is expected to adopt a plan in 
     which the state matches 5% of your contributions. These 
     college-savings plans are open to everyone, regardless of 
     income--in contrast to the Roth IRA and other federal savings 
     plans in which eligibility begins to phase out for couples 
     earning more than $100,000.
       If your state doesn't offer a college-savings plan, you can 
     still participate through an out-of-state plan. You won't get 
     the state tax deduction, but you will get tax-deferred 
     investment growth; and when the money is tapped, it will be 
     taxed at the student's rate (usually 15%). Fidelity 
     Investments (800-544-1722; www.state.nh.us), which runs the 
     New Hampshire savings plan, and TIAA-CREF (877-697-2837; 
     www.nysaves.org), which runs the New York plan, make it easy. 
     If your state later offers a savings plan with a tax 
     deduction, you can transfer your account penalty free.
       Both plans invest mostly in stocks in the early years and 
     slowly shift into bonds and money markets as your student 
     nears college age. You get no say in this allocation. The 
     impact of tax deferral is big. TIAA-CREF estimates that 
     someone in the 28% tax bracket savings $5,000 a year and 
     mimicking its investments in a taxable account could expect 
     to accumulate $167,000 in 18 years. Deferring taxes and then 
     paying them at 15% brings the total to $190,000. The state 
     deduction, for those who qualify, pushes the nest egg to 
     $202,000.
                                  ____


               [From the Birmingham News, Aug. 2, 1998.]

 Borrowing an Idea--Prepaid Tuition Plans Good for Private Colleges as 
                                  Well

       State-run, prepaid college tuition plans, such as the one 
     offered in Alabama, are marvelous ideas that are becoming 
     more popular each year.
       They help make sending children to public colleges within 
     the reach of more families.
       It's great that some private colleges are now borrowing the 
     concept, helping families better afford college educations at 
     their schools, which often can be several times as expensive 
     as state-supported schools.
       Recently, some 56 private colleges--including Birmingham-
     Southern College and Samford University--became members of

[[Page S372]]

     Tuition Plan Inc., a new prepaid program designed to work 
     like the state-run tuition plans:
       Parents invest in the plan when their children are young--
     through one lump sum or through monthly payments--as a 
     shelter against inflation, and the fund invests the money to 
     cover future tuition obligations.
       With the private TPI, parents get another bonus; Colleges 
     agree upfront to discount their tuition a guaranteed amount, 
     as much as 50 percent at some schools. And, as with the 
     public school tuition pacts, if a child decides not to go to 
     a school for which his or her parents already have paid, the 
     student gets a refund plus some of the interest and minus a 
     penalty (neither of the amounts has been decided).
       Organizers hope to eventually sign up 400 to 500 member 
     schools.
       Some of the important details of TPI haven't yet been 
     worked out, such as how the money will be invested to 
     maximize return and security, but the concept is grand.
       Not only will it make private school more affordable for 
     more families, it could lessen the need for financial aid, 
     since four-fifths of all current students at private colleges 
     and universities receive some form of it.
       And because schools will be discounting their tuition to 
     plan participants, it also might stem rising tuition costs.
       This time, it's the private sector that's learning from 
     government.
                                  ____


                [From the Washington Post, Aug. 7, 1998]

 If It's for College, Taxes Are Deferred--New State Plans Offer Better 
           Returns on Long-Term Savings for Higher Education

                        (By Albert B. Crenshaw)

       A growing number of states, taking advantage of recent tax 
     law changes, are rushing to create savings plans that enable 
     families to set aside tens of thousands of dollars a year in 
     tax-deferred accounts to pay college costs.
       The new programs allow families to make upfront investments 
     of as much as $50,000--building accounts that could dwarf the 
     $500-a-year Education IRA enacted with much fanfare last 
     year. The initial contribution is not deductible from federal 
     taxes, but the account's earnings are free of tax until the 
     child goes to college, when they are taxed at the child's 
     rate.
       The programs, resulting from several seemingly modest 
     changes in tax law in the past two years, have the potential 
     to allow families to save hundreds of thousands of dollars 
     for college while paying sharply reduced taxes on the 
     earnings.
       ``We think of it as the best-kept secret of the Taxpayer 
     Relief Act'' of 1997, said Stephen Mitchell of Fidelity 
     Investments, the big mutual fund operator.
       States can tailor the programs as they see fit, but 
     typically they are not restricted to residents of the 
     sponsoring state or to colleges within their borders.
       The states are crafting the programs in response to 
     constituent complaints about the soaring cost of higher 
     education. The savings accounts are expected to appeal in 
     particular to middle-class families that earn too much to 
     qualify for financial aid but often too little to cover 
     college costs without heavy borrowing. Affluent families 
     would benefit greatly as well, experts say, because they can 
     afford to put large sums into the plans.
       There is no limit on the incomes of contributors.
       Although sponsored by the states, the programs are 
     typically operated by a large money-management fund, which 
     invests the cash and handles the administration of the 
     accounts. Already, Fidelity is operating these plans, 
     variously known as savings trusts or 529 plans (after the tax 
     code section permitting them), for Delaware and New 
     Hampshire.
       New York and the Teachers Investment and Annuity 
     Association are launching one next month. At least five other 
     states offer some type of savings trust, and at least a dozen 
     jurisdictions, including Virginia and the District, are 
     studying the possibility.
       New Hampshire established its trust with Fidelity as 
     manager July 1. According to State Treasurer Georgie Thomas 
     and a Fidelity spokesman, it works like this:
       When a parent or other donor opens an account, the donor's 
     payments go into the trust where they are pooled with others 
     and invested in one of seven portfolios of Fidelity mutual 
     funds.
       No taxes are paid on the earnings until the money is 
     withdrawn, and proceeds can be used for room and board as 
     well as for tuition. Then, the income is taxable to the 
     student, who presumably would have little other income and 
     would be in a lower tax bracket than the parents.
       The total allowable contribution for a single beneficiary 
     is currently $100,311.
       If a parent were able to put $50,000 into one of these 
     accounts for a newborn, and the account earned 10 percent for 
     18 years, it would total about $278,000 when the child went 
     off to college. At 8 percent, it would amount to just under 
     $200,000.
       ``I think it's a great plan for upper-income and wealthy 
     people to use,'' said Raymond Loewe of College Money, a 
     Marlton, N.J., firm specializing in planning for college.
       Thomas, though, said she sees it as ``a middle-class 
     program.'' Low-income people qualify for government grants 
     and scholarships, and the wealthy can afford to pay out of 
     pocket, she said, while the middle class is forced to borrow.
       While it's possible to make a large contribution, accounts 
     can be opened with much smaller amounts. With automatic 
     payments, the plan will allow people to put in as little as 
     $50 a month, according to Fidelity.
       If the child doesn't go to college for whatever reason, the 
     account can be transferred to a sibling or other beneficiary.
       Also, parents can get at the money if they need it. Amounts 
     can be withdrawn for any reason, though earnings would be 
     subject to income tax plus a 15 percent penalty.
       Politicians at the national and state levels have sought 
     through a variety of ways to ease the burden of college costs 
     for middle-class voters. State officials fear that if they do 
     nothing, they risk losing residents or their money to other 
     states with attractive programs.
       Prepaid tuition plans have been successful in big states 
     with attractive public college systems. But smaller 
     jurisdictions, such as New Hampshire, Delaware and the 
     District, may find it difficult to attract enough families to 
     a prepaid program to make it viable.
       Savings trusts have existed in more limited form since 
     1990, but they have become much more attractive over the last 
     two years because of changes in the tax law made by Congress, 
     at the request of several states.
       In 1996, Congress added Section 529 to the federal tax 
     code, clarifying that investments in such trusts would be 
     tax-deferred and the distributions taxable at the student's 
     rate. Before that, their tax status was uncertain. Then last 
     year's tax law included provisions that allow a family to 
     contribute up to $50,000 in a lump sum to the trusts without 
     incurring a gift tax, and which allow the money to be used 
     for college expenses beyond tuition.
       Because of the enormous growth potential--prepaid plans 
     already have attracted hundreds of millions of dollars--big 
     money managers are actively vying for a piece of the action. 
     ``The big funds are out there in force,'' said Diana F. 
     Cantor, executive director of the Virginia Higher Education 
     Tuition Trust Fund.
       Fidelity's Mitchell said the programs fill a gap in 
     government efforts to assist families in saving for college. 
     The Education IRA, though its proceeds are tax-free, is too 
     restricted, and alternatives such as giving money to a child 
     have a variety of tax and other pitfalls, he said.
       ``We think for most people who are able to save at all, 
     $500 a year just isn't enough to let people get to their 
     goals,'' Mitchell said.
       The new savings trusts differ from prepaid tuition plans 
     that many states, including Virginia and Maryland, have 
     offered in recent years.
       While prepaid tuition plans promise to pay the tuition no 
     matter what the inflation rate, savings trusts do not. The 
     beneficiary gets whatever the investment amounts to when it's 
     time to go to college--and that amount may be more or less 
     than needed. With prepaid tuition, the state would cover a 
     shortfall; with a savings trust, that would be up to the 
     student.
       Also, most prepaid tuition plans are restricted to state 
     residents and state institutions--conditions that limit their 
     appeal to many families.
       This was a factor in New Hampshire's decision to go with a 
     savings trust, said Thomas, the state treasurer. ``We are a 
     small state. We have a lot of out-of-state students coming 
     into our schools, and conversely we have a lot of New 
     Hampshire students going to out-of-state schools,'' she said.
                                  ____


  [A Report of the Heritage Center for Data Analysis, Sept. 25, 1998]

         Who Would Benefit From Prepaid College Tuition Plans?

                          (By Rea S. Hederman)

       In 1997, Congress enacted legislation to provide taxpaying 
     Americans with new ways to save for their children's college 
     education. Specifically, Congress created tax-advantaged 
     ``education IRAs'' in the Taxpayer's Relief Act of 1997, 
     increasing the attractiveness of state-sponsored tuition 
     savings and prepayment plans. Many Members of Congress now 
     want to expand these opportunities.
       Advoactes of expansion claim that these plans will make it 
     easier for families to save for college and will take the 
     uncertainty out of planning for future costs of college 
     education. They argue that it is time for Congress and 
     President Bill Clinton to eliminate the double taxation of 
     interest earned through these programs and end the tax 
     disparity that currently exists between public and private 
     colleges.
       Indeed, the House Ways and Means Committee recently 
     adopted, as part of its $80 billion tax-cut package, a modest 
     expansion of tuition savings and prepayment plans. H.R. 4579 
     would extend the same tax treatment that state-sponsored 
     plans enjoy under the current law to plans at private 
     colleges and universities.
       Under this legislation, federal income tax on all interest 
     earned through the plans--whether public or private--would be 
     deferred until the student enrolls in college. The 
     committee's proposal, however, does not go far enough for 
     some Members who want to make all earnings through all of the 
     tuition savings and prepayment plans tax-free, thus vastly 
     expanding their benefits to participating families and 
     children.\1\
---------------------------------------------------------------------------
     Footnotes at end of article.
---------------------------------------------------------------------------
       How many children would benefit from the universal 
     availability of tax-advantaged tuition savings and prepayment 
     plans? A Center

[[Page S373]]

     for Data Analysis study shows that about 30 million children 
     could benefit, as demonstrated in the attached table by state 
     and congressional district.
       It should be noted that this study does not calculate the 
     financial benefits that might flow to families from expanding 
     tuition savings and prepayment plans, though the numbers 
     doubtless are significant. American families accumulated more 
     college debt during the first five years of the 1990s than in 
     the previous three decades combined.\2\ Recognizing that this 
     trend cannot continue, several states have established 
     tuition savings and prepaid tuition plans.\3\
       A common criticism of educational savings accounts is that 
     they are a tax break solely for the rich and upper class, so 
     not many children will benefit from them. However, the 
     experience of the existing state plans indicates that 
     working, middle-income families represent a significant 
     portion of participants.\4\ For example, families with annual 
     incomes of less than $35,000 purchased 62 percent of the 
     prepaid tuition contracts sold by Pennsylvania in 1996. The 
     average monthly contribution to a family's college savings 
     account during 1995 in Kentucky was 443.
       The attached table shows the number of children who stand 
     to benefit from expanded educational savings accounts and 
     tuition prepayment plans.


                              Methodology

       The data in the attached table came from the 1997 March 
     Current Population Survey produced by the Bureau of the 
     Census, and other data tabulated by the Census Bureau for The 
     Heritage Foundation.\5\
       Children were considered eligible if they were members of 
     family that had an annual monetary income of at least 125 
     percent of the poverty threshold.\6\ The analysis was 
     conducted at the state level, which gave the aggregate number 
     of children eligible. The children were distributed based on 
     each district's percentage of children above the 125 percent 
     of poverty level.
       Finally, the number of children in each district was 
     multiplied by the percentage of eligible high school 
     graduates in 1994 who went on to attend college in that 
     state.\7\


                               footnotes

     \1\ John S. Barry, ``Why Congress Must Fix the Tax Bill's 
     Educational Savings Plans,'' Heritage Foundation Executive 
     Memorandum No. 491, September 3, 1997. Legislation has been 
     introduced by Representative Bill Archer (R-TX), Kay Granger 
     (R-TX), Philip English (R-PA), and Gerald Weller (R-IL), and 
     Senators Jeff Sessions (R-AL), William Roth (R-DE), Bob 
     Graham (D-FL), Mitch McConnell (R-KY), Paul Coverdell (R-GA), 
     Thad Cochran (R-MS), Rod Grams (R-MN), and Spencer Abraham 
     (R-MI).
     \2\ ``College Debt and the American Family,'' Report from the 
     Education Resources Institutes and the Institute for Higher 
     Education Policy, September 1995, p. 6.
     \3\ For an overview of the state-based plans, see College 
     Savings Plans Network, National Assocication of State 
     Treasurers, ``Special Report on State College Plans'' 
     (Lexington, Ky.: Council of State Governments, 1996).
     \4\ Nina H. Shokraii and John S. Barry, ``Education: 
     Empowering Parents, Teachers, and Principals,'' in Stuart M. 
     Butler and Kim R. Holmes, eds., ``Issues '98: The Candidate's 
     Briefing Book'' (Washington, D.C.: The Heritage Foundation, 
     1998), p. 280.
     \5\ Data available upon request from the author.
     \6\ At 125 percent of the poverty level, there is a notable 
     increase in the number of tax filers who could realize tax 
     savings from these plans.
     \7\ ``Quality Counts,'' Education Week, Vol. XII, No. 17 
     (January 8, 1998), p. 79.

 NUMBER OF CHILDREN WHO COULD BENEFIT FROM PREPAID TUITION PLANS (1997)
------------------------------------------------------------------------
                                                   Number of eligible
                                                  children in families
                                                with income over 125% of
                                                      poverty level
       State and          U.S. Representative  -------------------------
congressional district          (party)                       Number who
                                                              are likely
                                                   Total      to attend
                                                             college \1\
------------------------------------------------------------------------
Alabama:
    1.................  S. Callahan (R).......      109,958       70,373
    2.................  T. Everett (R)........      115,268       73,771
    3.................  B. Riley (R)..........      108,420       69,389
    4.................  R. Aderholt (R).......      109,574       70,127
    5.................  B. Cramer (D).........      115,499       73,919
    6.................  S. Bachus (R).........      116,191       74,362
    7.................  E. Hilliard (D).......       93,876       60,081
Alaska:...............
    Single district...  D. Young (R)..........      192,307       71,154
Arkansas:
    1.................  M. Berry (D)..........      118,855       57,050
    2.................  V. Snyder (D).........      133,368       64,017
    3.................  A. Hutchinson (R).....      130,365       62,575
    4.................  J. Dickey (R).........      117,854       56,570
Arizona:
    1.................  M. Salmon (R).........      141,109       70,555
    2.................  E. Pastor (D).........      132,973       66,486
    3.................  B. Stump (R)..........      136,859       68,295
    4.................  J. Shadegg (R)........      139,219       69,609
    5.................  J. Kolbe (R)..........      128,124       64,062
    6.................  J.D. Hayworth (R).....      143,739       71,870
California:
    1.................  F. Riggs (R)..........      118,120       72,053
    2.................  W. Herger (R).........      108,623       66,260
    3.................  V. Fazio (D)..........      118,120       72,053
    4.................  J. Doolittle (R)......      119,307       72,777
    5.................  R. Matsui (D).........      106,249       64,812
    6.................  L. Woolsey (D)........      109,217       66,622
    7.................  G. Miller (D).........      121,682       74,226
    8.................  N. Pelosi (D).........       67,073       40,915
    9.................  B. Lee (D)............       89,629       54,674
    10................  E. Tauscher (D).......      124,649       76,036
    11................  R. Pombo (R)..........      120,494       73,502
    12................  T. Lantos (D).........      101,500       61,915
    13................  P. Stark (D)..........      125,243       76,398
    14................  A. Eshoo (D)..........       99,126       60,467
    15................  T. Cambell (R)........      112,184       68,433
    16................  Z. Lofgren (R)........      127,261       77,629
    17................  S. Farr (D)...........      118,536       72,307
    18................  G. Condit (D).........      128,211       78,209
    19................  G. Radanovich (R).....      118,702       72,408
    20................  C. Dooley (D).........      115,087       70,203
    21................  W. Thomas (R).........      125,718       76,688
    22................  L. Capps (D)..........      103,477       63,121
    23................  E. Gallegly (R).......      131,713       80,345
    24................  B. Sheman (D).........      105,655       64,450
    25................  B. McKeon (R).........      133,434       81,395
    26................  H. Berman (D).........      116,102       70,822
    27................  J. Rogan (R)..........       98,817       60,279
    28................  D. Dreier (R).........      126,430       77,122
    29................  H. Waxman (D).........       59,772       36,461
    30................  X. Becerra (D)........       98,889       60,322
    31................  M. Martinez (D).......      118,714       72,415
    32................  J. Dixon (D)..........       91,410       55,760
    33................  L. Roybal-Allard (D)..      115,075       70,196
    34................  E. Torres (D).........      134,740       82,191
    35................  M. Waters (D).........      111,223       67,846
    36................  H. Harman (D).........       94,555       57,679
    37................  J. Millender-McDon (D)      125,421       76,507
    38................  S. Horn (R)...........      102,865       62,748
    39................  E. Royce (R)..........      122,097       74,479
    40................  J. Lewis (R)..........      127,855       77,991
    41................  J. Kim (R)............      140,379       85,631
    42................  G. Brown (D)..........      143,584       87,586
    43................  K. Calvert (R)........      139,489       85,088
    44................  M. Bono (R)...........      116,636       71,148
    45................  D. Rohrabacher (R)....      100,313       61,191
    46................  L. Sanchez (D)........      121,147       73,900
    47................  C. Cox (R)............      113,965       69,519
    48................  R. Packard (R)........      123,450       75,305
    49................  B. Bilbray (R)........       74,523       45,459
    50................  B. Filner (D).........      119,901       73,140
    51................  R. Cunningham (R).....      120,732       73,646
    52................  D. Hunter (R).........      124,056       75,674
Colorado:
    1.................  D. DeGette (D)........       97,017       50,449
    2.................  D. Skaggs (D).........      137,236       71,363
    3.................  S. McInnis (R)........      123,228       64,079
    4.................  B. Schaffer (R).......      137,667       71,587
    5.................  J. Hefley (R).........      147,008       76,444
    6.................  D. Schaefer (R).......      142,118       73,901
Connecticut:
    1.................  B. Kennelly (D).......      105,416       62,195
    2.................  S. Gejdenson (D)......      116,249       68,587
    3.................  R. DeLauro (D)........      107,728       63,560
    4.................  C. Shays (R)..........      107,593       63,480
    5.................  J. Maloney (D)........      121,727       71,819
    6.................  N. Johnson (R)........      117,467       69,305
Delaware:
    Single district...  M. Castle (R).........      148,092       96,260
District of Columbia:
    Delegate..........  E. Holmes-Norton (D)..       55,515       34,364
Florida:
    1.................  J. Scarborough (R)....      105,015       51,457
    2.................  A. Boyd (D)...........      102,603       50,276
    3.................  C. Brown (D)..........       97,342       47,697
    4.................  T. Fowler (R).........      107,207       52,532
    5.................  K. Thurman (D)........       77,566       38,008
    6.................  C. Stearns (R)........      108,084       52,961
    7.................  J. Mica (R)...........      108,150       52,994
    8.................  B. McCollum (R).......      104,862       51,382
    9.................  M. Bilirakis (R)......       96,634       47,350
    10................  B. Young (R)..........       77,829       38,136
    11................  J. Davis (D)..........       95,193       46,645
    12................  C. Canady (R).........      106,550       52,209
    13................  D. Miller (R).........       77,939       38,190
    14................  P. Goss (R)...........       84,034       41,177
    15................  D. Weldon (R).........       99,600       48,804
    16................  M. Foley (R)..........       94,711       46,408
    17................  C. Meek (D)...........      102,516       50,233
    18................  I. Ros-Lehtinen (R)...       82,718       40,532
    19................  R. Wexler (D).........       88,791       43,508
    20................  P. Deutsch (D)........      105,673       51,780
    21................  L. Diaz-Balart (R)....      111,395       54,583
    22................  C. Shaw (R)...........       58,339       28,586
    23................  A. Hastings (D).......       99,819       48,911
Georgia:
    1.................  J. Kingston (R).......      122,289       72,151
    2.................  S. Bishop (D).........      104,436       61,617
    3.................  M. Collins (R)........      139,461       82,282
    4.................  C. McKinney (D).......      129,267       76,268
    5.................  J. Lewis (D)..........       94,173       55,562
    6.................  N. Gingrich (R).......      140,511       82,901
    7.................  B. Barr (R)...........      130,930       77,249
    8.................  S. Chambliss (R)......      125,811       74,228
    9.................  N. Deal (D)...........      126,757       74,786
    10................  C. Norwood (R)........      125,162       73,845
    11................  J. Linder (R).........      123,877       73,087
Hawaii:
    1.................  N. Abercrombie (D)....       85,883       53,247
    2.................  P. Mink (D)...........      105,297       65,284
Idaho:
    1.................  H. Chenoweth (R)......      111,901       53,713
    2.................  M. Crapo (R)..........      134,379       64,502
Illinois:
    1.................  B. Rush (D)...........       96,817       61,963
    2.................  J. Jackson (D)........      122,876       78,641
    3.................  W. Lipinski (D).......      120,353       77,026
    4.................  L. Gutierrez (D)......      128,044       81,948
    5.................  R. Blagojevich (D)....       92,506       59,204
    6.................  H. Hyde (R)...........      130,909       83,782
    7.................  D. Davis (D)..........       90,865       58,154
    8.................  P. Crane (R)..........      146,021       93,453
    9.................  S. Yates (D)..........       86,834       55,574
    10................  J. Porter (R).........      138,134       88,406
    11................  J. Weller (R).........      136,665       87,466
    12................  J. Costello (D).......      113,207       72,452
    13................  H. Fawell (R).........      155,443       99,483
    14................  D. Hastert (R)........      150,405       96,259
    15................  T. Ewing (R)..........      116,361       74,471
    16................  D. Manzullo (R).......      140,412       89,864
    17................  L. Evans (D)..........      118,541       75,866
    18................  R. LaHood (R).........      127,725       81,744
    19................  G. Poshard (D)........      113,300       72,512
    20................  J. Shimkus (R)........      123,317       78,923
Indiana:
    1.................  P. Visclosky (D)......      111,638       61,401
    2.................  D. McIntosh (R).......      103,673       57,020
    3.................  T. Roemer (D).........      115,806       63,693
    4.................  M. Souder (R).........      127,521       70,137
    5.................  S. Buyer (R)..........      118,667       65,267
    6.................  D. Burton (R).........      125,156       68,836
    7.................  E. Pease (R)..........      108,033       59,418
    8.................  J. Hostettler (R).....      101,105       55,608
    9.................  L. Hamilton (D).......      116,673       64,170
    10................  J. Carson (D).........       98,097       53,953
Iowa:
    1.................  J. Leach (R)..........      134,186       85,879
    2.................  J. Nussle (R).........      136,633       87,445
    3.................  L. Boswell (D)........      127,263       81,449
    4.................  G. Ganske (R).........      135,757       86,884
    5.................  T. Latham (R).........      140,138       89,688
Kansas:
    1.................  J. Moran (R)..........      144,997       82,649
    2.................  J. Ryun (R)...........      137,921       78,615
    3.................  V. Snowbarger (R).....      148,361       84,566
    4.................  T. Tiahrt (R).........      148,709       84,764
Kentucky:
    1.................  E. Whitfield (R)......      108,223       53,029
    2.................  R. Lewis (R)..........      122,191       59,874
    3.................  A. Northup (R)........      106,786       52,325
    4.................  J. Bunning (R)........      106,793       52,329
    5.................  H. Rogers (R).........      122,476       60,013
    6.................  S. Baesler (D)........       95,828       46,956
Louisiana:
    1.................  B. Livingston (R).....      108,873       57,703
    2.................  W. Jefferson (D)......       83,892       44,463
    3.................  B. Tauzin (R).........      114,456       60,662
    4.................  J. McCrery (R)........       81,386       43,135
    5.................  J. Cooksey (R)........      103,361       54,782
    6.................  R. Baker (R)..........      111,951       59,334
    7.................  C. John (D)...........      111,808       59,258
Maine:
    1.................  T. Allen (D)..........       98,056       49,028
    2.................  J. Baldacci (D).......       87,165       43,582
Maryland:
    1.................  W. Gilchrest (R)......      122,453       67,349
    2.................  R. Ehrlich (R)........      126,439       69,541
    3.................  B. Cardin (D).........      116,874       64,281
    4.................  A. Wynn (D)...........      132,915       73,103

[[Page S374]]

 
    5.................  S. Hoyer (D)..........      135,008       74,254
    6.................  R. Bartlett (R).......      132,118       72,665
    7.................  E. Cummings (D).......       98,541       54,197
    8.................  C. Morella (R)........      132,018       72,610
Massachusetts:
    1.................  J. Olver (D)..........      120,136       78,088
    2.................  R. Neal (D)...........      126,714       82,364
    3.................  J. McGovern (D).......      124,290       80,789
    4.................  B. Frank (D)..........      123,852       80,504
    5.................  M. Meehan (D).........      131,445       85,439
    6.................  J. Tierney (D)........      119,674       77,788
    7.................  E. Markey (D).........      104,556       67,961
    8.................  J. Kennedy (D)........       76,744       49,883
    9.................  J. Moakley (D)........      109,865       71,412
    10................  W. Delahunt (D).......      121,290       78,838
Michigan:
    1.................  B. Stupak (D).........      119,337       71,602
    2.................  P. Hoekstra (R).......      134,397       80,638
    3.................  V. Ehlers (R).........      136,876       82,125
    4.................  D. Camp (R)...........      119,719       71,831
    5.................  J. Barcia (D).........      121,053       72,632
    6.................  F. Upton (R)..........      118,194       70,916
    7.................  N. Smith (R)..........      124,675       74,805
    8.................  D. Stabenow (D).......      124,294       74,576
    9.................  D. Kildee (D).........      119,337       71,602
    10................  D. Bonior (D).........      127,725       76,635
    11................  J. Knollenberg (R)....      125,438       75,263
    12................  S. Levin (D)..........      120,862       72,517
    13................  L. Rivers (D).........      116,668       70,001
    14................  J. Conyers (D)........      101,418       60,851
    15................  C. Kilpatrick (D).....       74,348       44,609
    16................  J. Dingell (D)........      122,006       73,204
Minnesota:
    1.................  G. Gutknecht (R)......      140,016       74,208
    2.................  D. Minge (D)..........      146,786       77,796
    3.................  J. Ramstad (R)........      149,042       78,992
    4.................  B. Vento (D)..........      120,351       63,786
    5.................  M. Sabo (D)...........       90,263       47,840
    6.................  B. Luther (D).........      162,582       86,168
    7.................  C. Peterson (D).......      134,321       71,190
    8.................  J. Oberstar (D).......      131,204       69,538
Mississippi:
    1.................  R. Wicker (R).........      103,157       71,178
    2.................  B. Thompson (D).......       83,724       57,770
    3.................  C. Pickering (R)......      100,691       69,477
    4.................  M. Parker (R).........       93,730       64,674
    5.................  G. Taylor (D).........      102,093       70,444
Missouri
    1.................  B. Clay (D)...........      132,587       67,619
    2.................  J. Talent (R).........      178,713       91,144
    3.................  R. Gephardt (D).......      157,259       80,202
    4.................  I. Skelton (D)........      155,542       79,327
    5.................  K. McCarthy (D).......      140,310       71,558
    6.................  P. Danner (D).........      160,906       82,062
    7.................  R. Blunt (R)..........      143,957       73,418
    8.................  J. Emerson (R)........      135,161       68,932
    9.................  K. Hulshof (R)........      163,266       83,266
Montana: Single         R. Hill (R)...........      167,712       90,564
 district.
Nebraska:
    1.................  D. Bereuter (R).......      114,111       68,466
    2.................  J. Christensen (R)....      121,139       72,684
    3.................  B. Barrett (R)........      116,184       69,710
Nevada:
    1.................  J. Ensign (R).........      151,025       57,389
    2.................  J. Gibbons (R)........      168,267       63,941
New Hampshire:
    1.................  J. Sununu (R).........      115,308       64,572
    2.................  C. Bass (R)...........      116,934       65,483
New Jersey:
    1.................  R. Andrews (D)........      117,947       75,486
    2.................  F. LoBiondo (R).......      108,200       69,248
    3.................  J. Saxton (R).........      119,218       76,300
    4.................  C. Smith (R)..........      113,568       72,684
    5.................  M. Roukema (R)........      121,478       77,746
    6.................  F. Pallone (D)........      104,669       66,988
    7.................  B. Franks (R).........      108,200       69,248
    8.................  W. Pascrell (D).......      102,127       65,361
    9.................  S. Rothman (D)........       92,521       59,214
    10................  D. Payne (D)..........       96,900       62,016
    11................  R. Frelinghuysen (R)..      117,665       75,305
    12................  M. Pappas (R).........      119,360       76,390
    13................  R. Menendez (D).......       90,685       58,038
New Mexico:
    1.................  H. Wilson (R).........      111,873       60,411
    2.................  J. Skeen (R)..........      110,860       59,864
    3.................  B. Redmond (R)........      114,946       62,071
                  New
                   Yor
                   k:.
    1.................  M. Forbes (R).........      126,450       88,515
    2.................  R. Lazio (R)..........      121,392       84,975
    3.................  P. King (R)...........      111,909       78,336
    4.................  C. McCarthy (D).......      112,225       78,557
    5.................  G. Ackerman (D).......      103,373       72,361
    6.................  G. Meeks (D)..........      113,173       79,221
    7.................  T. Manton (D).........       81,561       57,092
    8.................  J. Nadler (D).........       62,593       43,815
    9.................  C. Schumer (D)........       90,096       63,067
    10................  E. Towns (D)..........       88,199       61,739
    11................  M. Owens (D)..........      107,167       75,017
    12................  N. Velazquez (D)......       84,406       59,084
    13................  V. Fossella (R).......      104,322       73,025
    14................  C. Maloney (D)........       51,529       36,070
    15................  C. Rangel (D).........       68,283       47,798
    16................  J. Serrano (D)........       80,612       56,428
    17................  E. Engel (D)..........       92,309       64,616
    18................  N. Lowey (D)..........       96,102       67,272
    19................  S. Kelly (R)..........      117,915       82,540
    20................  B. Gilman (R).........      124,238       86,966
    21................  M. McNulty (D)........      102,425       71,697
    22................  G. Solomon (R)........      121,709       85,196
    23................  S. Boehlert (R).......      110,960       77,672
    24................  J. McHugh (R).........      117,283       82,098
    25................  J. Walsh (R)..........      115,070       80,549
    26................  M. Hinchey (D)........      104,322       73,025
    27................  B. Paxon (R)..........      123,289       86,302
    28................  L. Slaughter (D)......      105,586       73,910
    29................  J. LaFalce (D)........      107,167       75,017
    30................  J. Quinn (R)..........      102,425       71,697
    31................  A. Houghton (R).......      113,489       79,442
North Carolina
    1.................  E. Clayton (D)........       95,341       48,624
    2.................  B. Etheridge (D)......      108,085       55,123
    3.................  W. Jones (R)..........      110,897       56,557
    4.................  D. Price (D)..........      108,506       55,338
    5.................  R. Burr (R)...........      103,406       52,737
    6.................  H. Coble (R)..........      110,594       56,403
    7.................  M. McIntyre (D).......      107,856       55,006
    8.................  B. Hefner (D).........      120,546       61,479
    9.................  S. Myrick (R).........      118,039       60,200
    10................  C. Ballenger (R)......      114,700       58,497
    11................  C. Taylor (R).........       97,202       49,573
    12................  M. Watt (D)...........      102,001       52,021
North Dakota: Single    E. Pomeroy (D)........      131,864       89,667
 district.
Ohio:
    1.................  S. Chabot (R).........      108,478       55,324
    2.................  R. Portman (R)........      134,306       68,496
    3.................  T. Hall (D)...........      111,622       56,927
    4.................  M. Oxley (R)..........      127,343       64,945
    5.................  P. Gillmore (R).......      138,573       70,672
    6.................  T. Strickland (D).....      107,579       54,865
    7.................  D. Hobson (R).........      123,525       62,998
    8.................  J. Boehner (R)........      132,958       67,809
    9.................  M. Kaptur (D).........      118,135       60,249
    10................  D. Kucinich (D).......      110,948       56,583
    11................  L. Stokes (D).........       94,777       48,337
    12................  J. Kasich (R).........      119,932       61,165
    13................  S. Brown (D)..........      135,204       68,954
    14................  T. Sawyer (D).........      109,600       55,896
    15................  D. Pryce (R)..........      109,600       55,896
    16................  R. Regula (R).........      121,279       61,852
    17................  J. Traficant (D)......      109,151       55,667
    18................  B. Ney (R)............      113,868       58,073
    19................  S. LaTourette (R).....      119,258       60,822
Oklahoma:
    1.................  S. Largent (R)........      103,052       50,495
    2.................  T. Coburn (R).........       97,609       47,828
    3.................  W. Watkins (R)........       89,236       43,726
    4.................  J. C. Watts (R).......      106,521       52,195
    5.................  E. Istook (R).........      104,069       50,994
    6.................  F. Lucas (R)..........       97,669       47,858
Oregon:
    1.................  E. Furse (D)..........      117,445       66,944
    2.................  R. Smith (R)..........      109,222       62,256
    3.................  E. Blumenauer (D).....      105,138       59,929
    4.................  P. DeFazio (D)........      105,910       60,369
    5.................  D. Hooley (D).........      114,189       65,088
Pennsylvania:
    1.................  R. Brady (D)..........       86,253       49,164
    2.................  C. Fattah (D).........       83,100       47,367
    3.................  R. Borski (D).........      103,594       59,049
    4.................  R. Klink (D)..........      108,323       61,744
    5.................  J. Peterson (R).......      105,396       60,076
    6.................  T. Holden (D).........      108,999       62,129
    7.................  C. Weldon (R).........      112,377       64,055
    8.................  J. Greenwood (R)......      131,745       75,094
    9.................  B. Shuster (R)........      111,927       63,798
    10................  J. McDade (R).........      111,251       63,413
    11................  P. Kanjorski (D)......      102,018       58,150
    12................  J. Murtha (D).........      102,693       58,535
    13................  J. Fox (R)............      116,656       66,494
    14................  W. Coyne (D)..........       84,452       48,137
    15................  P. McHale (D).........      112,602       64,183
    16................  J. Pitts (R)..........      127,466       72,655
    17................  G. Gekas (R)..........      117,782       67,136
    18................  M. Doyle (D)..........       97,514       55,583
    19................  W. Goodling (R).......      117,332       66,879
    20................  F. Mascara (D)........      100,892       57,508
    21................  P. English (R)........      109,675       62,515
Rhode Island:
    1.................  P. Kennedy (D)........       79,820       51,883
    2.................  R. Weygand (D)........       83,345       54,174
South Carolina:
    1.................  M. Sanford (R)........      115,317       66,884
    2.................  F. Spence (R).........      112,748       65,394
    3.................  L. Graham (R).........      109,390       63,446
    4.................  B. Inglis (R).........      110,114       63,866
    5.................  J. Spratt (D).........      112,814       65,432
    6.................  J. Clyburn (D)........       98,194       56,952
South Dakota Single     J. Thune (R)..........      140,376       70,188
 district.
Tennessee:
    1.................  W. Jenkins (R)........       96,498       52,109
    2.................  J. Duncan (R).........      101,581       54,854
    3.................  Z. Wamp (R)...........      104,267       56,304
    4.................  V. Hilleary (R).......      104,555       56,460
    5.................  B. Clement (D)........      100,143       54,077
    6.................  B. Gordon (D).........      125,082       67,544
    7.................  E. Bryant (R).........      124,123       67,026
    8.................  J. Tanner (D).........      108,871       58,791
    9.................  H. Ford (D)...........       94,004       50,762
Texas:
    1.................  M. Sandlin (D)........      109,450       54,725
    2.................  J. Turner (D).........      111,250       55,625
    3.................  S. Johnson (R)........      137,172       68,586
    4.................  R. Hall (D)...........      124,931       62,466
    5.................  P. Sessions (R).......      109,090       54,545
    6.................  J. Barton (R).........      143,653       71,826
    7.................  B. Archer (R).........      140,772       70,386
    8.................  K. Brady (R)..........      140,412       70,206
    9.................  N. Lampson (D)........      119,891       59,945
    10................  L. Doggett (D)........      107,650       53,825
    11................  C. Edwards (D)........      114,850       57,425
    12................  K. Granger (R)........      121,331       60,665
    13................  W. Thornberry (R).....      110,890       55,445
    14................  R. Paul (R)...........      117,730       58,865
    15................  R. Hinojosa (D).......      101,169       50,584
    16................  S. Reyes (D)..........      114,490       57,245
    17................  C. Stenholm (D).......      114,130       57,065
    18................  S. Lee (D)............       96,128       48,064
    19................  L. Combest (D)........      130,332       65,166
    20................  H. Gonzalez (D).......      107,650       53,825
    21................  L. Smith (R)..........      125,651       62,826
    22................  T. DeLay (R)..........      142,573       71,286
    23................  H. Bonilla (R)........      118,090       59,045
    24................  M. Frost (D)..........      132,852       66,426
    25................  K. Bentsen (D)........      128,891       64,446
    26................  R. Armey (R)..........      132,132       66,066
    27................  S. Ortiz (D)..........      109,810       54,905
    28................  C. Rodriguez (D)......      113,770       56,885
    29................  G. Green (D)..........      118,090       59,045
    30................  E. Johnson (D)........      106,209       53,105
Utah:
    1.................  J. Hansen (R).........      180,375      101,010
    2.................  M. Cook (R)...........      166,456       93,215
    3.................  C. Cannon (R).........      174,484       97,711
Vermont: Single         B. Sanders (I)........      114,170       58,227
 district.
Virginia:
    1.................  H. Bateman (R)........      105,583       55,959
    2.................  O. Pickett (D)........      103,453       54,830
    3.................  R. Scott (D)..........       80,333       42,576
    4.................  N. Sisisky (D)........      101,961       54,039
    5.................  V. Goode (D)..........       87,791       46,529
    6.................  B. Goodlatte (R)......       87,045       46,134
    7.................  T. Bliley (R).........      106,223       56,298
    8.................  J. Moran (D)..........       83,103       44,045
    9.................  R. Boucher (D)........       81,718       43,311
    10................  F. Wolf (R)...........      116,770       61,888
    11................  T. Davis (R)..........      111,017       58,839
Washington:
    1.................  R. White (R)..........      135,518       77,245
    2.................  J. Metcalf (R)........      131,200       74,784
    3.................  L. Smith (R)..........      128,543       73,269
    4.................  D. Hastings (R).......      125,111       71,313
    5.................  G. Nethercutt (R).....      118,578       67,590
    6.................  N. Dicks (D)..........      121,236       69,104
    7.................  J. McDermott (D)......       79,606       45,375
    8.................  J. Dunn (R)...........      145,372       82,862
    9.................  A. Smith (D)..........      126,993       72,386
West Virginia:
    1.................  A. Mollohan (D).......       75,146       37,573
    2.................  B. Wise (D)...........       78,123       39,062
    3.................  N. Rahall (D).........       70,579       35,290
Wisconsin:
    1.................  M. Neumann (R)........      123,637       74,182
    2.................  S. Klug (R)...........      117,215       70,329
    3.................  R. Kind (D)...........      122,113       73,268
    4.................  G. Kleczka (D)........      119,686       71,812
    5.................  T. Barrett (D)........       93,816       56,290
    6.................  T. Petri (R)..........      126,575       75,945
    7.................  D. Obey (D)...........      124,616       74,770
    8.................  J. Johnson (D)........      126,466       75,880
    9.................  J. Sensenbrenner (R)..      138,982       83,389
Wyoming: Single         B. Cubin (R)..........      105,143       55,726
 district.
                                               -------------------------
    United States.....  ......................   48,464,580   30,048,040
------------------------------------------------------------------------
\1\ This figure was obtained by multiplying the number of children
  considered eligible to use the prepaid tuitions by the state
  percentage of high school graduates who attend college. This study
  does not attempt to predict the increase in number of children who
  would attend college as a result of the prepaid tuition plans.
\2\ All data were taken from the 1997 March Current Population Survey
  and other Bureau of the Census tabulations.
 
Sources: U.S. Census Bureau and tabulations by The Heritage Foundation.


[[Page S375]]


------------------------------------------------------------------------
                                                   Number of eligible
                                                  children in families
                                                with income over 125% of
                                                      poverty level
                     State                     -------------------------
                                                              Number who
                                                              are likely
                                                   Total      to attend
                                                               college
------------------------------------------------------------------------
Alabama.......................................      769,479      492,466
Alaska........................................      192,307       71,154
Arizona.......................................      821,835      410,918
Arkansas......................................      500,442      240,212
California....................................    5,935,685    3,620,768
Colorado......................................      784,294      407,833
Connecticut...................................      676,262      398,994
Delaware......................................      148,092       96,260
District of Columbia..........................       55,515       34,419
Florida.......................................    2,192,380    1,074,266
Georgia.......................................    1,362,858      804,086
Hawaii........................................      188,381      116,796
Idaho.........................................      244,326      117,277
Illinois......................................    2,449,191    1,567,482
Indiana.......................................    1,126,515      619,583
Iowa..........................................      674,064      431,401
Kansas........................................      579,989      330,594
Kentucky......................................      664,549      325,629
Louisiana.....................................      715,800      379,374
Maine.........................................      185,220       92,610
Maryland......................................      996,365      548,001
Massachusetts.................................    1,154,041      750,127
Michigan......................................    1,906,347    1,143,808
Minnesota.....................................    1,074,564      569,519
Mississippi...................................      483,396      333,543
Missouri......................................    1,072,706      547,080
Montana.......................................      167,712       90,564
Nebraska......................................      351,434      210,860
Nevada........................................      319,292      121,331
New Hampshire.................................      232,242      130,055
New Jersey....................................    1,412,539      904,025
New Mexico....................................      337,678      182,346
New York......................................    3,161,260    2,212,882
North Carolina................................    1,297,173      661,558
North Dakota..................................      131,864       89,667
Ohio..........................................    2,245,912    1,145,415
Oklahoma......................................      598,095      293,067
Oregon........................................      551,904      314,586
Pennsylvania..................................    2,252,045    1,283,666
Rhode Island..................................      163,165      106,057
South Carolina................................      658,577      381,975
South Dakota..................................      140,376       70,188
Tennessee.....................................      959,220      517,979
Texas.........................................    3,600,318    1,800,159
Utah..........................................      521,315      291,936
Vermont.......................................      114,170       58,227
Virginia......................................    1,065,424      564,675
Washington....................................    1,107,174      631,089
West Virginia.................................      223,849      111,924
Wisconsin.....................................    1,088,351      653,011
Wyoming.......................................      105,143       55,726
------------------------------------------------------------------------

  Mr. GRAHAM. Mr. President, I am proud to join Senator Sessions and 
other colleagues in launching an initiative to increase Americans' 
access to college education. Today, we are introducing the Collegiate 
Learning and Student Savings Act. This bill would extend tax-free 
treatment to all state sponsored prepaid tuition plans and state 
savings plans in the year 2000. This legislation would also give 
prepaid tuition plans established by private colleges and universities 
tax-deferred treatment in 2000, and tax-exempt status by 2004.
  Prepaid college tuition and savings programs have flourished at the 
state level in the face of spiraling college costs. According to the 
College Board, between 1980 and 1997, tuition at public colleges 
increased by 107 percent, while the median income increased just 12 
percent. The cause of this dramatic increase in tuition is the subject 
of significant debate. But whether these increases are attributable to 
increased costs to the universities, reductions in state funding for 
public universities, or the increased value of a college degree, the 
fact remains that financing a college education has become increasingly 
difficult.
  Although the federal government has increased its aid to college 
students over the years, it is the states who have engineered 
innovative ways to help its families afford college. Michigan 
implemented the first prepaid tuition plan in 1986. Florida followed in 
1988. today 43 states have either implemented or are in the process of 
implementing prepaid tuition plans or state savings plans.
  Mr. President, prepaid college tuition plans allow parents to pay 
prospectively for their children's higher education at participating 
universities. States pool these funds and invest them in a manner that 
will match or exceed the pace of educational inflation. This ``locks 
in'' current tuition and guarantees financial access to a future 
college education. Congress has already acted to ensure that tax on 
distributions from state sponsored programs are tax-deferred.
  Senator Sessions and I believe the 106th Congress must move to make 
state programs 100 percent tax free. Students should be able to enroll 
in college without fear of then having to pay taxes on the money 
accrued. The legislation would extend the same treatment to private 
college prepaid programs in 2004.
  We believe that these programs should be tax free for numerous 
reasons. First, for most families, they have in essence purchased a 
service to be provided in the future. The accounts are not liquid. The 
funds are transferred from the state directly to the college or 
university. Under current policy, the student is required to find other 
means of generating the funds to pay the tax. Second, Congress should 
make these programs tax free in order to encourage savings and college 
attendance.
  Perhaps most importantly, prepaid tuition and savings programs help 
middle income families afford a college education. Florida's experience 
shows that it is not higher income families who take most advantage of 
these plans. It is middle income families who want the discipline of 
monthly payments. They know that they would have a difficult time 
coming up with funds necessary to pay for college if they waited until 
their child enrolled. In Florida, more than 70 percent of participants 
in the state tuition program have family incomes of less than $50,000.
  I am pleased to have this opportunity to join my colleagues in 
support of good tax policies which enhance our higher education goals. 
Prepaid tuition plans deserve our support through enactment of 
legislation that would make them tax-free for American families and 
students.
                                 ______