Budget refs: College savings bill would raise deficit

A bipartisan bill intended to improve college savings plans known as 529s would raise the deficit by $51 million over the next decade, budget scorekeepers estimated Thursday.

The legislation, headed toward a House vote next week, would reduce the government’s revenue and therefore increase the deficit between 2015 and 2025, according to the the nonpartisan Congressional Budget Office and Joint Committee on Taxation.

{mosads}Reps. Lynn Jenkins (R-Kan.) and Ron Kind (D-Wis.) introduced the bill, which would count computers as a qualified expense, loosen paperwork requirements on 529 accounts and allow refunds to be deposited tax-free within 60 days. 

The planned vote comes about a month after the White House decided to nix a plan in President Obama’s budget to tax withdrawals from 529 college plans. Lawmakers on Capitol Hill pressured the administration to drop it. Obama had originally argued that without the proposal, the ability to withdraw tax-free from the plans largely benefits wealthier families.

Jenkins said recently about 12 million people benefit from 529 plans, which states and education institutions operate to help families set aside money for college.