Parents would be able to use a tax-free savings account originally created for college expenses to put away money for private K-12 school tuition under a proposal in the GOP tax reform bill, a move that would largely aid families who can already afford private school tuition.
The 529 college savings plan encourages parents to save for their child’s college education by allowing them to earn interest and withdraw money tax-free for higher education. But the tax reform bill would allow parents to use those same plans for up to $10,000 a year in private school expenses. It would allow them to start saving the money before their child is born.
The proposal would further a key piece of the agenda of Education Secretary Betsy DeVos, who seeks to expand school choice and to allow public dollars to follow children to private schools.
“This is a good step forward, reflecting that education should be an investment in individual students, not systems,” DeVos said Thursday. “I look forward to continuing to work with congressional leaders to ensure all families have equal access to the education that meets their child’s unique needs.”
But even some school choice proponents assailed the plan, saying it offered no benefits for poor families who have little choice in where they send their children to school. Mike Petrilli of the right-leaning Thomas B. Fordham Institute said the plan appears to benefit families who can afford to save for private school, such as the Trumps, who send their son to a private, religious school.
“If we are going to use scarce resources to advance school choice, we should do it for poor and working class kids, not for families who can already afford private school tuition,” Petrilli said.
The proposal has also raised the ire of public school advocates, who say it encourages families to send their children to private school and indirectly cuts into public school funds.
“In our view, it’s further incentivizing wealthy Americans to educate their children in private school settings,” said Sasha Pudelski, assistant director for policy and advocacy at the American Association of School Administrators, which represents public school superintendents across the country. “It’s a chance to divert public resources — in this case revenues — into private educational settings.”
Lindsey Burke, director of the Center for Education Policy at the conservative Heritage Foundation, said the proposal is a good first step in expanding options for families — and could make a difference for some families considering private school. The Heritage Foundation has been advocating for expanding 529 plans since 2012.
Public education advocates also expressed concern about a provision in the tax proposal that eliminates the federal deduction for state and local taxes. By increasing the federal tax burden on individuals, advocates worry that states, counties and cities will have a tougher time raising money for schools, which get most of their money from state and local tax revenues.
“When people can no longer deduct what they pay in [state and local] taxes, their willingness and ability to pay those taxes is eroded,” said Noelle Ellerson Ng, a policy expert at the American Association of School Administrators.
Separately, teacher unions assailed a proposal to scrap a tax deduction that allows workers to deduct certain out-of-pocket job expenses from their taxes. Teachers spend nearly $500 a year of their own money on school supplies, according to one study, and many use the $250 deduction to lighten their tax burden.
“As educators spend more and more of their own funds each year to buy basic essentials, Republican leaders chose to ignore the sacrifice made by those who work in our nation’s public schools to make sure students have adequate books, pencils, paper and art supplies,” said Lily Eskelsen García, president of the National Education Association.
A previous version of this story misstated the findings of a study on how much teachers spend on school supplies every year. This story has been updated.