[Congressional Record (Bound Edition), Volume 145 (1999), Part 1]
[Senate]
[Page 658]
[From the U.S. Government Publishing Office, www.gpo.gov]



                            PREPAID TUITION

  Mr. ABRAHAM. Mr. President, I rise to urge my colleagues' support for 
the Collegiate Learning and Student Savings, or ``CLASS,'' Act. This 
legislation will help Americans as they seek to secure, for themselves 
and for their children, the increased opportunity and earnings 
potential available only to college graduates in this country.
  Mr. President, America is the land of opportunity. But that 
opportunity comes at a price. More and more that price comes in the 
form of an increasing cost of a college education. College graduates on 
average earn 40 percent more than do those who have not graduated from 
college. But the increased opportunity college provides keeps getting 
more and more expensive.
  College costs have risen dramatically--5 to 6 percent every year over 
the past decade. According to the College Board, the average annual 
cost for tuition, room and board at a public university is now $7,472. 
At a private college the cost is a whopping $19,213 per year.
  If costs continue rising as they have been, a four-year college 
education will cost $75,000 at a public university and $250,000 at a 
private college by the time the average newborn begins attending in 
2016.
  Costs like these can send families deeply into debt. American 
families have already accrued more college debt in the 1990's than 
during the 1960's, 1970's, and 1980's combined. Yet, according to a 
1997 poll conducted for the Student Loan Marketing Association, only 
about 18 percent of families start saving for college before their 
child begins high school.
  Why aren't more families saving for their children's college 
education? Clearly one important reason is the fact that Washington 
subsidizes student debt while penalizing savings. Student loans are 
offered at low, federally subsidized rates in order to help more kids 
afford college. But families that try to save in advance for college 
face a situation in which their income is taxed before it goes into a 
savings account, and the interest they earn on their education savings 
are then taxed again every year. It is time for Washington to stop 
punishing working families for planning ahead for their children's 
future. It is time to help middle class kids and their parents afford a 
college education.
  Mr. President, this is why The Collegiate Learning and Student 
Savings, or ``CLASS,'' Act is so important. This legislation will help 
more than 2.5 million students afford a college education. It would 
extend tax-free treatment to prepaid tuition plans sponsored by States 
and private institutions.
  Currently, 39 States, including my own State of Michigan, have 
prepaid tuition plans that allow parents to save for their children's 
college education. Now, a nationwide consortium of more than 100 
private schools, in 32 different States, have launched a similar plan.
  These plans overwhelmingly benefit working, middle-income families. 
For example, families with an annual income of less than $35,000 
purchased 62 percent of the prepaid tuition contracts sold by 
Pennsylvania in 1996. In Kentucky, the average monthly contribution to 
a family's college savings account was $43 in 1995.
  By making all of these plans tax-free, we can help families afford 
the ever-increasing cost of a college education. I urge my colleagues 
to support this important legislation.

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