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College Savings Plans Could Extend to K-12 Private Schools Under GOP Tax Plan

Stock photo of open books on table.
PEXELS
Tax-free accounts originally meant for college expenses could be used to pay for K-12 private schools.

When federal lawmakers return to Washington today, they’ll continue working on tax reform. StateImpact Ohio’s Ashton Marra reports the GOP plan includes a provision that supporters say would expand school choice options.

Both the House and Senate tax reform proposals include changes to the 529 college savings plan. 529s are tax-free investment accounts that are limited to paying for college expenses. GOP lawmakers want to expand their use allowing families to use up to $10,000 a year per account for K-12 private schools.

Republicans say the change increases school options, but Democrats argue only the wealthy benefit from the program’s tax breaks.

The nonprofit Brookings Institute says three-quarters of the accounts nationally are held by families with six-figure incomes. Tim Gorrell oversees the program in Ohio.

“We have a spectrum of people that are very high income, very medium or moderate income to even lower income," Gorrell said.

Ohio doesn’t track account holder incomes, but Gorrell said he’s made the assessment based on account sizes and contributions. In 2016, the average account held less than $17,000 and the average contribution was less than $100.