Under bill, 529 plans can go for K-12 costs

A late amendment to the Republicans’ tax overhaul would allow parents to put money they save for their children’s college costs toward K-12 education, including private school tuition and homeschool expenses.

The Senate plan would expand 529 education savings accounts that have been restricted to college tuition and expenses.

“Expanding 529’s to include any educational option is a common-sense reform that reflects the reality that we must begin to view education as an investment in individual students, not systems,” Education Secretary Betsy DeVos said.

Colleges and universities must be accredited or recognized by the U.S. Department of Education for the expenses to be eligible for 529 money, but it’s unclear how that type of requirement would apply to K-12 expenses at private schools or homeschooling, if at all.

The measure is part of the Senate Republicans’ sweeping $1.5 trillion revamp of the nation’s tax code. The House earlier this year approved a similar 529 expansion effort in its version of the tax overhaul, which still needs to be reconciled with the Senate plan. The House version did not include homeschooling expenses.

Sen. Ted Cruz, a Texas Republican, said he expects that states will have the discretion over what qualifies under the K-12 expansion.

If signed into law, the plan would mark an expansion of the 20-year-old 529 program, which generally works by allowing families to set up savings accounts for future schooling expenses, with some tax savings on the returns on the investments.

Some school-choice supporters have been critical of 529 expansion ideas because they would only help high-income families that can afford to put money in the savings programs.

“This provision will help a relative handful of affluent families who are already choosing private schools. It seems unlikely to expand school-choice options for families in the middle or working classes,” said Mike Petrilli, president of the conservative Thomas B. Fordham Institute.