Many college students are faced with graduating with large sums of debt.
Florida’s undergraduate tuition and fees from 2012-2013 increased from 10.8 percent. Florida’s increase surpasses the national average of 5 percent and In 2013-2014 tuition and fees are reported to increase again.
According to the Federal Reserve Bank of New York, student loans have nearly tripled since 2004 and have surpassed credit card and automobile debt, reaching about $870 billion.
Florida Rep. Dennis Ross is a co-sponsor of the Making College Affordable Act of 2013. This bill, which was introduced in March, would amend the Internal Revenue Code of 1895 to loosen restrictions on the Coverdell education savings account.
The Coverdell ESA allows anyone with an annual income below $110,000 to create a savings account for a student younger than 18 and contribute up to $2,000 a year.
No one can add funds to the account once the beneficiary turns 18. Distributed funds are tax-free so long as they are approved for the student expenses.
If the bill passes, benefactors could deposit funds into the account until the beneficiary turns 26, and the maximum contribution will increase to $10,000 a year with the contribution limit being adjusted for inflation after 2013.
Katie Hughes, Dennis’ communications director, said the bill would increase student financial independence.
“By allowing Americans to take money they would have paid in taxes and put it toward saving for future college education needs, people will become less dependent on burdensome student loans to pay for their education,” Hughes said.
Akua Sartong, a teacher with a 3-year-old son, believes the act would help reduce the national debt but worries that it may not be the best fit for her.
“Putting money away is not an option,” Sartong said.
She believes if she were more financially stable, she would set aside money for the account.
Jim Hermes, associate vice president of government relations for the American Association of Community Colleges, believes the act would only create a small improvement.
“It’s very hard to say, but I don’t think it would have any more than a slight effect,” Hermes said. “Because legislation helps most those who have fairly substantial resources to save for college and thus a group of people who may be less reliant on student loans in the first place.”
The bill is still being processed.