It would let families use federal college savings accounts for credentialing beyond the standard college degree.
There is a shortage of skilled labor in the United States, with millions of open jobs and employers struggling to find employees. Virginia Rep. Abigail Spanberger wants to make it easier for families to pay for the education and certification needed to help make more mechanics, carpenters and electricians out of younger generations.
To do that, Spanberger, a Democrat, introduced a bill that would let parents use a popular federal tax-savings program, known as a 529 account, to pay for the costs of obtaining or maintaining certain credentials or training needed for skilled labor jobs.
“To keep our region’s economy strong, we need to make sure Central Virginia students and workers receive the training required to remain competitive and successful,” Spanberger said.
Her bill, which was cosponsored by Virginia Republican Rep. Rob Whitman and backed by the Richmond Times-Dispatch, is awaiting review in the House Ways and Means Committee.
American families often foot the bill for their kid’s college education, to the tune of $26,226 per year, according to Sallie Mae, a banking company that provides consumer loans. In 2017, Sallie Mae data shows family savings and income typically covered 43% of college costs.
Many American parents rely on 529 plans to ease the financial strain of sending kids to school. The 529 plans act as an investment account and allow a saver to put aside money to invest or purchase credits at participating colleges and universities to help pay for tuition and fees.
As things stand now, if the 529 beneficiary decides they want to enter certain post-secondary training programs to become an airplane technician, solar panel installer, or some other type of skilled worker in a high-demand field, that savings can go to waste. If you remove the money for an “unqualified” expense, it is penalized and taxed as income.