Legislation Would Help Families Save for Education Needs

Member Group : Center Square

(The Center Square) – Pennsylvania lawmakers say legislation making its way through the House will bring the state’s education savings programs in line with federal law – further helping Pennsylvania families save for their children’s future needs.

The House Finance Committee voted unanimously on Tuesday to move House Bill 1267 to the floor for consideration. The proposal would update the Tuition Account Programs and College Savings Bond Act, also known as the TAP Act, to align with federal changes. It also transfers the Keystone Scholars Grant Program from the fiscal code into the TAP Act, where officials say it belongs.

During the hearing, bill co-sponsor Rep. Keith Greiner, R-Lancaster, said although a previous version had broad-based support, it did not pass, and he is “glad to be a part this bill and to work in a bipartisan manner, which doesn’t always happen here.”

Fellow co-sponsor Rep. Patrick Gallagher, D-Philadelphia, said prior to former President Donald Trump’s Tax Cuts and Jobs Act in 2017, 529 savings plans could only be used for postsecondary education. The new law allows funds to be used for K-12 education, as well as apprenticeship programs.

In its current form, the Treasury does not have full authority required to administer the expanded 529 programs. HB 1267 would update state law, allowing oversight needed to ensure accounts are used in accordance with federal law.

Treasurer Stacy Garrity told the committee the PA 529 Program has helped families pay for $5.6 billion in qualified education expenses over the past 31 years, and passing the bill would make it even better.

She recognized the General Assembly for its history of “strong bipartisan support.”

Garrity said former Sen. Robert Jubelirer, a Republican, spearheaded what was then known as the Tuition Account Program Act 11 of 1992. It was unanimously approved by both a Republican-controlled Senate and a Democrat-controlled House, then signed into law by Democrat Gov. Bob Casey, Sr.

“In other words, the idea of empowering families to save for their children’s education and their futures – it’s always been bipartisan,” she said.

The 529 Investment Plan, or IP, gives families a choice of investment portfolio options to best meet their savings goals. Garrity said it has received three consecutive silver ratings from Morningstar, deeming it a best-in-class plan nationwide.

The Keystone Scholars program gives every child born in Pennsylvania on or after Jan. 1, 2019 – including those adopted – a $100 starter deposit. No taxpayer dollars are used; it is funded by surplus investment earnings from the GSP. There are currently 60,000 children registered.

New accounts will continue to receive the $100 incentive as long as the GSP is funded over 110% – it is currently funded at 128%, even after returning some funds to GSP account owners and waiving fees.

Garrity reported over 23% of families with registered Keystone Scholar accounts have opened and linked other 529 accounts – saving $55.8 million to date – and they have used their accounts to pay for $180 million of K-12 tuition expenses.

GSP and IP programs may be used for K-12 education, whereas Keystone Scholars funds are accessible for qualified education expenses after a child reaches adulthood.

Garrity explained the updated bill gives the Treasury the authority to invest GSP funds appropriately for K-12 expenses based on the shorter time frame for using them. It will also ensure funds are invested appropriately to maintain fiscal health in order to meet the needs of beneficiaries – whatever level of education they’re seeking.

At the time, officials said less-than-stellar outreach efforts meant fewer rural communities knew about the program. Garrity said she visited every county in the state – attending county fairs, senior expos and legislative events –to boost awareness.