Guest column: Proposed changes could greatly enhance 529 college saving programs

As the landscape of higher education continues to change, it is important for college savings programs to have the opportunity to evolve and keep pace with these trends.

The proposed H.R. 529 legislation is a positive step in achieving this goal. Just recently the U.S. House of Representatives approved the legislation, with a 401-20 vote. Should the same bipartisan support and approval come from the Senate and president, the bill could become law in the near future, resulting in favorable changes for plan holders and administrators.

These provisions in H.R. 529 would undoubtedly improve 529 programs and better assist families in their efforts to save for higher education expenses. Some of these benefits include:

· Computers will become a qualified expense. H.R. 529 would make computers, related equipment and services (like Internet access) qualified expenses. Under current law, computers are only eligible if a school requires students to have one. However, with online college courses, e-textbooks, and virtual classwork becoming the norm, computers have become essential for many students to fully participate in their college experience.

· Distribution aggregation requirements will be removed. H.R. 529 would eliminate an outdated and unnecessary account rule that adds costly paperwork requirements for 529 plan administrators. This requirement is no longer needed since earnings are not taxed if the taxpayer uses the withdrawal for qualified higher education expenses like tuition, books, and room and board.

· Redeposit funds will become tax-free. Currently, refunds are treated like a nonqualified withdraw subject to taxes and penalties on the earnings portion of withdraw from the 529 account. H.R. 529 would allow families to recontribute the refund to their 529 account within 60 days and avoid those taxes and penalties. Refunds occur from a variety of reasons including scholarships, financial aid, or withdrawing from courses due to an illness. Regardless of the reason, this would ensure refunds are not subject to penalty if re-deposited back into a 529 account in a timely manner.

For more than a decade 529 college savings accounts have become and continue to be one of the most popular tools used by hard-working families to save for higher education expenses. In fact, from 2001 to 2014, 529 plans across the country have increased from 1 million to roughly 12 million accounts. And in Kansas alone, 529 plans have over $4.6 billion in assets. More than 180,000 individuals rely on the state’s 529 plans as an important tool used to set aside funds to finance their child’s education.

According to the University of Kansas, an in-state freshman who takes 30 credit hours over the course of two semesters in the College of Liberal Arts & Sciences pays: $9,548 in tuition, $900 in required fees, $5,800 - $9,500 in room and board, and $1,040 in books. That’s more than $17,000 in annual college costs. Fortunately, these are all qualified expenses for a student beneficiary of a 529 college savings plan.

Currently, 529 college savings plans assist millions in achieving their educational goals while reducing the amount of student loan debt they must incur along the way. However, the measures in H.R. 529 would enhance and improve 529 programs to better assist families in their efforts to save for future higher education expenses and help current students achieve their career aspirations. I thank the House of Representatives for voting to implement these improvements, and optimistically await the fate of H.R. 529, which now rests in the hands of the Senate.

Ron Estes is the 39th state treasurer for the state of Kansas. For information regarding the Kansas 529 Education Savings Program, visit www.LearningQuest.com or call 1-800-579-2203.

This story was originally published March 13, 2015 at 2:00 AM with the headline "Guest column: Proposed changes could greatly enhance 529 college saving programs."