529 Reform: Promote a Culture of Savings & Educational Opportunity
Most higher education tax programs are poorly timed for working families. The vast majority of tax programs for higher education, such as the American Opportunity Tax Credit, come in the form of after-purchase subsidies. For these programs, households receive the tax benefit months after paying for tuition, buying books or financing some other qualified education expense. This structure of support naturally benefits households who can tap existing savings for educational purchases today while counting on support in the future after they file taxes. This does very little for the millions of households who have very little savings.
In this Federal Policy Brief, the authors explore the opportunities for federal policy to create a culture of savings.