[Congressional Record Volume 151, Number 70 (Tuesday, May 24, 2005)]
[Senate]
[Page S5854]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Smith, Mr. Wyden, 
        Mr. McConnell, Mr. Jeffords, Mr. Lott, Mr. Schumer, Mr. Kerry, 
        Mr. Bingaman, Mr. Rockefeller, Mrs. Lincoln, Ms. Landrieu, Mr. 
        Corzine, Mr. Talent, and Mr. Hagel):
  S. 1112. A bill to make permanent the enhanced educational savings 
provisions for qualified tuition programs enacted as part of the 
Economic Growth and Tax Relief Reconciliation Act of 2001; to the 
Committee on Finance.
  Mr. BAUCUS. Mr. President, I am pleased to join Senator Grassley, and 
our other colleagues, in introducing legislation to make the Section 
529 enhancements enacted in 2001 permanent.
  In 2001, it was the Senate, especially my good friend Chairman 
Grassley, that insisted on including education savings in the tax bill. 
I am proud of that fact. And I am proud that the Senate is again taking 
the lead to make these important provisions permanent.
  Higher education is critical to our children's future and our 
Nation's economy. As a parent, or grandparent, you know that providing 
your children with a college education means they are likely to earn 
substantially more than if they only have a high school degree. One 
study estimated a million dollars more in today's dollars.
  College is a good investment, but a very expensive one. The cost of 
tuition is rising every year. Over the past ten years, expenses at 
public universities have increased nearly 40 percent. The U.S. 
Department of Education says the average cost of a four-year education 
is currently $34,000 and almost $90,000 for private colleges.
  In 1996, Congress created 529 plans to help families plan for this 
expense. Since their inception, 529 plans have helped families' college 
savings grow faster by not taxing investment income while it is 
accumulating in the account. In 2001, we saw a need to do more to help 
families deal with skyrocketing costs, so we allowed tax-free 
distributions from the account, as long as the money goes for its 
intended purpose--post-secondary education expenses. This income 
exclusion will expire after 2010 if we don't do something about it.
  There are a lot of provisions that will expire in 2010--so why focus 
on this one provision today? Because saving for college doesn't happen 
in five or six years. We want families to save today for college 
expenses fifteen to twenty years from now. Without this legislation, we 
are asking families to make critical investment decisions without the 
promise of today's tax benefits. This is not a good way to encourage 
savings. Making this tax benefit permanent will allow families to plan 
and finance their children's education beyond 2010.
  Thousands of young people back home have 529 plan accounts. By the 
end of 2004, Montana families had over $128 million set aside through 
the Montana Family Education Savings Program. Across the country there 
is about $68 billion invested in over 7 million accounts. The average 
account balance is just over $9,000. Not enough to finance a college 
education, but an important start.
  One of the great things about 529 plans is that grandparents can save 
for the future of their grandchildren. That is what Arlene Hannawalt 
did--she saved through a 529 plan for her granddaughter Nicole's 
education. Nicole dropped out of high school, but she is getting her 
GED. Later this year, with help from her 529 account, Nicole will be 
going to the University of Montana--Helena College of Technology to 
study accounting.
  Nicole's father is in the Army National Guard, serving in Iraq. Our 
prayers are with him. I'm sure Nicole's family is very pleased that she 
will soon be a college student.
  Tax-favored treatment for college savings is good policy, but it is 
not free. I assure my colleagues that we will be looking for 
appropriate offsets to cover the cost of this bill.
  Education is one of my top priorities. And saving for education 
should be one of a family's top priorities. I encourage my colleagues 
to join in making the tax status of 529 benefits permanent to help 
millions of American families plan for their children's future.
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