May 24,2005

Baucus Bill Encourages Families to Save for Higher Education

Legislation Will Make Certain Tax Benefits Permanent for Education Savings Plans

(WASHINGTON, D.C.) Today, Senator U.S. Senator Max Baucus joined Senator Grassley tointroduce legislation that will make certain tax benefits permanent for individuals saving forcollege. Section 529 plans, also know as qualified state tuition plans, provides tax incentives forAmericans to save for higher education.

“Higher education is critical to young people’s future and our nation’s economy,” Baucussaid. “The Section 529 college savings plan is an easy and safe way for families to save forcollege.”

As part of the Economic Growth and Tax Reconciliation Act (EGTRRA), SenatorGrassley and Baucus worked to expand the 529 plans to provide tax deductions and exemptionsto those saving for college. These tax benefits were set to expire on December 31, 2010, buttoday’s legislation makes them permanent.

“The cost of tuition is rising every year,” Baucus said. “Over the past ten years,expenses at public universities have increased nearly 40 percent. We need to give families thetools they need to save up for this huge expense. Making these tax benefits permanent, familiescan plan and finance their children’s college education.

All 50 states and the District of Columbia provide 529 plans. The savings plans areadministered through state plans or through institutions of higher education. Families of allincome levels can participate in the plan.Currently, over 7 million young people are enrolled in these with over $67 billioninvested for college. Baucus noted that Montana has over $128.5 million set aside for collegethrough the 529 plans.

“Million of young people in have benefited and are benefiting from these college savingsplan,” Baucus said. “I encourage my collegues to make 529 tax benefits permanent so we cancontinue to provide millions of American families an safe and economic way to save forcollege.”