[Congressional Record (Bound Edition), Volume 149 (2003), Part 13]
[House]
[Page 17908]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     NEW LAWS FOR EDUCATION SAVINGS

  The SPEAKER pro tempore (Mr. Gingrey). Under a previous order of the 
House, the gentleman from Michigan (Mr. Smith) is recognized for 5 
minutes.
  Mr. SMITH of Michigan. Mr. Speaker, I want to talk tonight a little 
bit about the importance of a college education and some of the laws 
that this Congress has passed to encourage better savings for 
education.
  Some of the concerns that we need to consider is the fact that 
individual students and their parents in the future probably are going 
to have to be more responsible for coming up with a larger share of the 
funds for their kids' college education.
  Benjamin Franklin once said, ``An investment in knowledge always pays 
the best interest.'' As we move to a high-tech economy, that is 
certainly truer than ever. High school dropouts earn an average of $360 
a week, while high school graduates earn $506. Two-year college 
graduates earn $598 a week, and 4-year college graduates earn on an 
average $796. Over a life of work, a college graduate can expect to 
earn $620,000 more than a community college graduate, $810,000 more 
than a high school graduate and a whopping $1,115,000 more than a high 
school dropout.
  In addition to dollars, education gives a person more options to do 
what they want to do in life. This is one of the reasons I tell young 
people who visit me to study hard. It is also why I started the LeGrand 
Smith Scholarship Fund for high school seniors from the 7th 
Congressional District of Michigan. Finally, it is why I have pushed 
for tax savings for parents and grandparents to save for their 
children's and grandchildren's education. Simply put, there is nothing 
that can brighten a young person's future more than education.
  The cost of education, while still worthwhile given the earnings 
difference, it is very expensive. Under present trends, a child born 
today can expect to pay about $125,000 for 4 years at a State 
university, about twice that much for a private university. There is a 
lot of Federal and State government scholarships, tax benefits, work 
study programs, subsidized loans and financial aid for people in 
college.
  Congress has also created two tax-favored savings programs in recent 
years that help families save for education, and these two I think are 
important.
  The Coverdell Education Savings Account allows eligible taxpayers to 
contribute up to $2,000 a year. These contributions are taxable, but 
the accrued earnings when a person takes them out are not taxable. The 
accounts are flexible and can be used to pay for educational expenses 
in grade school, high school or college. They can be even used to 
defray the costs of home school education. In addition to tuition, the 
money can be used for books, supplies, equipment, tutoring, services 
for children with special needs, Internet access, et cetera. These 
accounts are open to taxpayers earning less than $220,000 a year for 
couples.
  Another option, as I conclude, Mr. Speaker, is the 529 plan. These 
are tax-deferred educational savings programs that put contributions 
under management like pension programs. They are often State-sponsored 
and provide good flexibility. Contributions can be made in a lump sum 
or in installments, and many States also contribute when a person 
starts spending that money for a college education. In Michigan, we 
contribute $1 for every $3 deposited.
  I would encourage every friend and family member to think about 
educational savings for their children, their grandchildren, their 
nephews, their nieces. The expense of college education is daunting, 
but investing some now will allow for compound interest and growth over 
time. For example, even with the current low prospects for a return on 
earnings, saving just $80 in a month can grow to $31,000 over the 18 
years it takes a child to be ready for college. It is important to get 
started right away.
  Mr. Speaker, education is important. Everybody should be looking at 
the advantages of saving now.

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