ATLANTA - Low-to-middle-income families who save ahead for their children's college education would get help in the form of tax breaks under a plan announced by Gov. Roy Barnes on Friday.
The plan would establish a state-run higher education savings account and give families making less than $75,000 a year tax deductions and exemptions on the money they save.
Supporters say the plan helps families who, even with Georgia's lottery-funded HOPE scholarship, are feeling the pinch from spiraling college costs. Savings in the new account could be used for expenses HOPE doesn't cover.
Some lawmakers would like to see more Georgians included in the plan or worry that a government-run fund isn't the answer.
Mr. Barnes announced the plan with 4-year-olds from a nearby day care center sitting on his desk, holding diplomas and wearing graduation caps.
"Now, the biggest financial concern for many families is, `How will I be able to afford a college education for my children?"' he said.
Since 1992, the average tuition cost of Georgia's four-year colleges and universities has increased by 45 percent, according to governor's office figures.
The proposal was welcomed by educators who work with the families of students hoping to attend college.
"Anything that can give an incentive to families to start saving for college is a good thing," said Joe Bettinger, who counsels seniors and their families at Effingham County High School in southeast Georgia.
Too often, Mr. Bettinger said, parents of high school students, particularly in low- and moderate-income families, don't think about saving for college until it's almost too late.
Under the plan, parents could contribute up to $6,000 a year to a state-run savings account for each of their children, with a lifetime limit of $120,000 per child. If the parents' gross income is less than $75,000, the first $2,000 could be deducted from their state income taxes.
The plan also exempts any earnings in the account from state income taxes. The program has a "catch-up" provision, which would allow families with children 10 years old or older to contribute up to $12,000 a year for the first three years.
Early withdrawals from the fund would be subject to both state and federal taxes, plus a 10 percent penalty.
The projected tax breaks mean the state would take in about $33 million less yearly, depending on how many families use the plan, according to the governor's office.
Supporters say the plan, combined with the HOPE scholarship, would put the state among the nation's leaders in making college accessible to students.
While HOPE pays tuition at state universities and colleges, the education savings account could be used at any public or private school, in state or out, and go toward housing, food and other expenses.
During Friday's news conference, Mr. Barnes thanked Rep. Louise McBee, D-Athens, who introduced a similar bill last year that passed the House unanimously. But it was halted in the Senate by Mr. Barnes while his staff explored how much the plan would cost.
Ms. McBee's plan didn't include the governor's income cap. She said she hopes to get the figure raised to about $100,000 when the House considers the bill.
The plan is expected to be introduced by Mr. Barnes' floor leaders in the House of Representatives on Monday.
Reach Doug Gross at (404) 589-8424 or firstname.lastname@example.org.
© 2017. All Rights Reserved. | Contact Us