Student Empowerment Act This bill allows tax-exempt distributions from qualified tuition programs (known as 529 plans) to be used for additional educational expenses in connection with enrollment or attendance at an elementary or secondary school. (Under current law, distributions in connection with an elementary or secondary school are limited to tuition for a public, private, or religious school.) The bill allows the distributions to be used for additional educational expenses, including curriculum and curricular materials, books or other instructional materials, online educational materials, tutoring or educational classes outside the home, testing fees, fees for dual enrollment in an institution of higher education, and educational therapies for students with disabilities. Distributions may also be used for tuition and the purposes above in connection with a homeschool (whether treated as a homeschool or a private school under state law).
The enactment of SB57 could significantly impact educational funding at the state level by allowing families to utilize tax-advantaged 529 savings for a broader range of educational contexts beyond traditional higher education. By including elementary and secondary educational expenses, the bill serves to provide financial relief to families facing the rising costs of K-12 education. It also signals a growing recognition of the varied educational pathways available to students today, including homeschooling and specialized tutoring services.
SB57, designated as the Student Empowerment Act, seeks to amend the Internal Revenue Code to expand the use of 529 account funds. Currently, 529 plans primarily allow tax-free distributions for higher education expenses. This bill broadens that scope to include a myriad of qualified expenses for K-12 education. Allowable expenses under this bill include tuition for public and private schools, curriculum materials, online educational resources, tutoring services, standardized testing fees, as well as educational therapies for students with disabilities. This flexibility aims to assist families in managing education costs more effectively.
As with many educational funding proposals, SB57 is not without contention. Critics may argue that expanding the use of 529 funds to include K-12 expenses could lead to a diversion of money from public education systems, potentially undermining public school funding. Other concerns revolve around the implications for income inequality, as wealthier families may benefit disproportionately from tax breaks associated with 529 accounts. The debate may also center on the effectiveness of including expenses meant for homeschooling and educational therapies, questioning whether such provisions will achieve the intended equity in educational opportunities.