01.24.05

Cantwell Promotes Tax Cuts for College Savings

Legislation provides students and their familiesmore than $3,000 in additional tax benefits

WASHINGTON, D.C. – Sen. Maria Cantwell today introduced legislation to cut taxes for college, to help make the dream of a higher education more affordable for American students and their families. Cantwell today filed two pieces of legislation that would increase by an average of $3,000 the tax benefits for families saving money for their children's education. Additional tax savings for some could reach more than $10,000.

"It's critical we give American families the flexibility they need to make smart decisions about college savings," Cantwell said. "Improving access to higher education will determine our success in the global economy, but tuition costs are on the rise. That's why American families need a range of options—to ensure they can save for college, early and often."

Cantwell's legislation would expand the options now available for families that use the Coverdell Education Savings Account program. Currently, this program allows families to put up to $2,000 per year in special education savings accounts, where interest accumulates on these investments tax-free.

Cantwell's "Education for Students Act" would bump up the maximum contribution to these accounts from $2,000 to $5,000 per year. At current rates, families could accumulate an average $3,000 in additional tax-free college savings under the new proposal—or much more, depending on how much they choose to put away.

Cantwell's "College Savings Act" would give families the option of taking the tax benefit up front—as an income tax deduction at the time the investments are made—rather than years later, when the money is withdrawn to pay for school.

Cantwell was the first member of her family to earn a college degree, working her way through school and relying on federal Pell Grants to help finance her education.