(May 2) – A bill by Rep. Brittany Pettersen and Rep. Dave Young to alter college savings accounts to greater benefit middle-class families passed the House on second reading this morning. Currently, 529 college savings accounts disproportionately benefit the wealthy; HB16-1003 reorients the benefits of the state tax deductions to help middle-class families save for college.
“This is a bill to help middle-class families save for college,” said Rep. Pettersen, D-Lakewood. “The Middle Class College Savings Act is about helping the families in the donut hole: those who don’t qualify for financial aid but really struggle to save for college. Let’s strategize where we put our dollars and put it towards the middle-class families who need it most.”
“This bill will help boost and incentivize savings for the Colorado families who can least afford to go into debt,” said Rep. Young, D-Greeley. “Families today have more school debt than credit card debt, but when we encourage families to start saving early, we can really turn things around.”
CollegeInvest, Colorado’s 529 college savings program, offers a variety of tax benefits that help families save for college tuition. It is such a successful program that many wealthy families from across the country choose to create accounts, even without being eligible for the Colorado state income tax deduction.
Under the Middle Class College Savings Act, families making under $150,000 a year would get double the state income tax deduction or 200 percent, while families earning from $150,000 to under $250,000 would get a 150 percent deduction and families earning from $250,000 to $500,000 would get a 40 percent state income tax deduction. Those making over $500,000 would no longer get a state income tax deduction.
The voice vote sends the Middle Class College Savings Act to the House floor for third reading.