JEFFERSON CITY—State Sen. Eric Schmitt, R-Glendale, filed Senate Concurrent Resolution 11 today, which would urge Congress to not remove the tax-deferred treatment of 529 college savings plans. These plans are used to encourage families to save money for future higher education expenses, with earnings exempt from federal and state tax.

Last week, during the annual State of the Union address, the president indicated he would push for free community college for all citizens. To fund the initiative, he’s proposed taxing 529 plans. In 1996, Congress created 529 plans, named after the applicable section in the IRS code.

Senate Concurrent Resolution 11 would urge Congress to not take any action that would negatively impact the tax-deferred treatment of 529 savings plans.

“These plans were originally created to promote financial responsibility through long-term savings for college education. Since then, 529 plans have been an invaluable tool used by millions of Americans to help their children receive higher education,” said Sen. Schmitt.
“We should be rewarding parents who plan ahead for their children’s future, not punishing them. This is a misguided approach by the president.”

Senator Schmitt also noted that 529 plans help students attend college without having to overly rely on student loans.

Last year, national student loan debt topped $1 trillion. In 2012, 63 percent of students graduating from a four-year school in Missouri had student loan debt; the average amount was more than $24,000. Currently, almost 100,000 Missourians are making student loan payments.

“There has been a broad national conversation in recent years about student loan debt, and how it’s crippling the ability of college graduates to move ahead in life,” said Sen. Schmitt. “One of the best ways to combat that problem is making it easier for parents and students to save for college, which is exactly what 529 plans do. Eliminating their tax-free status would only exacerbate the student loan problem. It would also prevent many Americans from even pursuing college.”

“Education has been, and will always be, the pathway to a better life and the American Dream. Individuals with higher levels of education benefit from lower unemployment rates, better jobs and higher earning potential,” said Sen. Schmitt. “Changing the tax exemption status of these plans threatens future generations from achieving those same successes. I will use all resources available to me to protect these plans for future generations.”

For more information on Sen. Schmitt’s legislative efforts, visit his official Missouri website at www.senate.mo.gov/schmitt.