House Republicans introduce bill to ease costs of college savings plans
Del.
"Despite the fund being 138 percent funded, Virginia529's leadership has continued to charge a 10 percent pricing reserve," Landes said in the release. "The Prepaid529 program was created to make higher education more accessible and affordable; we should be striving to do that at every opportunity."
The agency Virginia529 allows families to set up different kinds of savings plans for college. Savings funds are exempt from federal taxes, and contributions to the account are eligible for a state income tax deduction.
Prepaid529 is the savings plan that Virginians can use to prepay one to 10 semesters of college -- a cost of up to
That reserve is supposed to be a buffer so that these savings plans are not underfunded.
The reserve pricing, plus strong stock and bond markets, have helped fund the prepaid plans to 138 percent of projected future costs.
But in June, the
"Higher education tuition costs have outpaced wage growth drastically over the past decade, making it more difficult for hard-working, middle-class parents to afford to send their children to college," Hugo said in a news release about the bill.
Landes' and Hugo's bill would lock that pricing reserve to 5 percent or less if the prepaid plans are funded more than 105 percent. For context, that's estimated to save eight-semester plan-holders at least
If the plans are funded at 105 percent or less, the bill proposes that the pricing reserve can be raised up to 10 percent.
The bill caught Virginia529 CEO
"105 percent -- right off the bat, that's too low, I would say," Morris said.
In actuarial terms, funding 100 percent of expected future costs actually means there is a 50 percent chance you'll have enough money to pay for college because college tuition rates are in flux, Morris said.
Morris said her board had planned to discuss potential policy changes later this month, and she was not expecting legislation any time soon.
The bill would also require Virginia529's governing board to give a "detailed" written explanation of any change to the pricing reserve, within 30 days of a change, to JLARC, the
"Obviously we are very appreciative of Del. Landes' efforts to increase college affordability and make sure
Morris said her group is hoping to have discussions with lawmakers about this soon.
Amin can be reached by phone at 757-247-4890.
___
(c)2018 the Daily Press (Newport News, Va.)
Visit the Daily Press (Newport News, Va.) at www.dailypress.com
Distributed by Tribune Content Agency, LLC.
Dayton asks for federal help after storm damage
Savannah businesses prepare for hurricane season
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News