Giving Compass' Take:

· Jonathan Butcher discusses the federal expansion of 529 college savings plans, the benefits for both K-12 and higher education students, and the differences by state.

· What are some advantages of using a 529 college savings plan for K-12 tuition? 

· Read more on the tax-advantages of the federal 529 expansion. 

College students will be heading back to campus in a few weeks, and a nontrivial consideration for students and parents will be how to pay for tuition in the fall. But recent changes to federal tax law may affect how millions of families consider K-12 and postsecondary options in the future.

In 2017, Washington lawmakers amended federal law so that parents and families that save money in 529 college savings plans can use their savings for K-12 private school tuition along with college expenses like tuition and books. 529 savings plans are named after part of the federal tax code and allow families to save money for postsecondary expenses (and now K-12 private school tuition). The accounts offer certain federal tax incentives for saving, and many states also provide tax benefits.

Washington’s decision to allow families to use 529 accounts to pay for K-12 private school tuition is welcome—it’s account holders’ money, after all—but now state lawmakers should make sure state law does not interfere.

When it comes to K-12 and postsecondary laws, usually states are the ones trying to wrest control back from Washington because of federal overreach. Education is a priority for states, and Washington is often guilty of overstepping its bounds. But the change to 529 savings accounts made Washington the one offering flexibility, and now states need to make sure families and students have more choices with their savings.

Read the full article about the changes with college savings plans by Jonathan Butcher at the In Defense of Liberty Blog.