The Treasury Department has proposed several improvements for Section 529 college savings plans, including the use of age-based index funds and the elimination of home-state biases.
The report, prepared for the White House Task Force on Middle-Class Working Families, was introduced at a meeting of the White House task force, chaired by Vice President Joe Biden, at Syracuse University in New York, where attendees discussed ways to help families save and pay for college.
"I know how challenging it is for parents and students who are trying to save or pay for college," Biden said. "We should be making this process easier, not more difficult, and we're starting by tearing down barriers so that middle-class families have the means to send their kids to college."
The Treasury report recommends eliminating a "home-state bias" in the assessment of fees and state taxes that force many families to choose the funds offered in their home state instead of funds available in other states. The report also recommends putting limits on 529 plan account balances on a per-beneficiary basis, rather than on a state-by-state basis, to help spread education aid to more low- and middle-income families.
The Treasury aims to improve transparency by collecting data via a survey questionnaire on 529 plan participation and investments, and making historical investment return information available directly from the College Savings Plan Network's website. In addition, the Treasury report recommends that Congress and the states work together to strengthen compliance and monitoring of Section 529 accounts and their disbursements.
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