The Weekend is usually reserved for less-topical discussions about American public education and American society in general. But this morning’s move by the U.S. Senate to pass a tax cut plan brings up one of the least-sensible approaches to expanding school choice touted by the most-hardcore of advocates: Expanding the use of 529 higher education savings plans for financing private school tuition.
Dropout Nation already discussed the House Republican version of the plan, which managed to gain approval as part of the lower house’s tax cut proposal. But Senate Republicans had managed to avoid offering a similar plan. But last night, just hours after Senate Republicans hastily crafted its tax plan without a single hearing or deliberation (and often with illegibly handwritten notes redlining what little was in print), Texas Sen. Ted Cruz successfully amended the bill to include a proposed 529 expansion that is little different from the House proposal.
As you would expect, hardcore school choice activists are pleased as punch with the move. Invest in Education Foundation, whose vice president wrote an op-ed in The Hill earlier this week calling for the Senate to enact the proposal, tweeted the news proudly. Expect more to come from Heritage Foundation’s Lindsey Burke, who has been the lead player in getting Congressional Republicans to put the idea into law.
Certainly the expansion of 529s may superficially expand opportunities for children to attain high-quality education. But the key word is “superficially”. As your editor explained last month, the effort does little for families regardless of income or background.
For poor families, especially those from Black and Latino backgrounds, the 529 expansion is of no benefit to them because they don’t earn enough income to either open up and maintain a 529 account. This is especially problematic when you consider that neither Congressional Republicans nor the Trump Administration offered up an Earned Income Tax Credit-style program that would help these families gain money that they could then put into 529 plans to pay for private school tuition payments and tutoring (as well as even save for college).
Because of the nature of 529 plans, as well as the lack of a education tax credit, the Senate and House proposals raise concerns school choice advocates such as Howard Fuller have had about Education Savings Accounts: That poor families lose out at the expense of families that already have resources and can take advantage of various vehicles that allow them to save and reduce tax burdens all at once.
Yet the 529 expansion plans also don’t help middle class and affluent families. This is because the more money siphoned off from contributions to elementary and secondary education expenses, the less money will go towards college savings. Even if a family contributed the full maximum of $14,000 a year (which is almost never done), the nation’s average private school tuition of $7,700 (which is often higher in states such as California, Maryland, and New York), results in families forfeiting both the immediate contributions as well as the future investment gains and interest compounding in the process. Given the high costs of higher education, this means more middle class families lose out on the ability to help their children gain the postsecondary knowledge they need for success in adulthood.
What makes the House and Senate plans especially bad policy is tat they could have easily expanded school choice for all families by using another existing vehicle: Flexible Spending Accounts. Those are already used by families to pay for preschool and child care expenses as well as medical costs, and could have been expanded for use in financing private-school tuition and other K-12 expenditures. That move would have been even better for families who already use those plans, as well as for poor and minority households, because those are funded through paycheck withholding and would be supported by the 20 percent federal child care tax credit already in place. But this wasn’t considered.
Put simply: The 529 expansion plans are bad policy. Contrary to what hardcore choice activists want to argue, the proposals will do nothing to help the most-vulnerable children gain opportunities for high quality education. More importantly, as I noted last month, the lack of a companion plan to expand choice for poor and minority children and their families (and the uselessness of the proposal for families who are merely middle class or affluent) means that 529 expansion is merely a tax subsidy for the wealthiest families who can already pay for private school tuition out of their own pockets (and would stick to using 529 plans for paying for college savings).
When you consider that the 529 proposals are part of tax cut proposals that eliminate the Individual Mandate, a key tool for helping poor families gain healthcare coverage they need to keep their children healthy, and September’s elimination of the Children’s Health Insurance Program (which covers 8.9 million children from low-income households), it becomes even clearer that the 529 expansion plans are callous acts of policymaking by men and women who care nothing about helping all children survive and thrive from conception to adulthood.
Meanwhile any discussion about the 529 expansion proposal cannot be divorced from the Trump Administration’s White Supremacist war against Black, Latino, and immigrant children from Latin America, Africa, and Asia. This is because the administration’s failure to push for an education tax credit that would benefit those children is another example of how it has no great interest in helping anyone who isn’t White or the descendant of European immigrants. The fact that there are so-called reformers working for the administration in the U.S. Department of Education — and that Betsy DeVos is Secretary of Education — means nothing. Because they, too, are part of the administration’s concerted disdain towards poor and minority communities.
Meanwhile the 529 expansion proposals will do damage to efforts by reformers to expand choice, especially vouchers and charter that have proven to help poor and minority children escape failure mills. Progressive and centrist Democrat reformers who have just begun warming up to the idea of moving beyond charters as a vehicle for school choice, now find themselves on the defensive as ideological fellow-travelers, angered by this tax subsidy for wealthy families, will oppose nearly every form of choice. Congressional Republicans basically weaponized a key approach to transforming American public education, playing into the hands of traditionalists such as the National Education Association, the American Federation of Teachers, and suburban districts, the most-fervent opponents of helping poor kids escape failing schools.
There is no way anyone who calls his or herself a champion for all children and a school reformer can be pleased with the passage of this proposal. Not one way. At all.