Sponsors (17)
Introduced February 26, 2025 by Amy Klobuchar · Last progress February 26, 2025
The bill broadens 529 account use to make credential and workforce training more affordable and flexible for students, workers, and military personnel, but it raises risks of diverted college savings, administrative complexity, potential misuse of tax-advantaged funds, and modest revenue loss for taxpayers.
Students, workers (including low-income individuals), and veterans can use 529 funds to pay tuition, testing, and required continuing-education fees for recognized postsecondary credential programs and apprenticeships, lowering their out-of-pocket costs for workforce credentials.
Parents and families gain greater flexibility because 529 accounts can fund postsecondary workforce training and credential programs in addition to traditional college, making savings more useful for diverse career paths.
Taxpayers and families may subsidize low-value or broadly defined certificates if the definition of 'recognized' credentials is expanded or abused, risking misuse of tax-advantaged funds.
Students and families might shift 529 savings away from traditional college toward shorter credential programs, reducing funds available for four-year degrees and altering who can afford college.
Expanding 529-eligible uses increases potential long-term revenue loss for the Treasury, which could marginally affect taxpayers or crowd out other spending priorities.
Based on analysis of 2 sections of legislative text.
Expands the types of expenses that can be paid with tax-advantaged Section 529 plan distributions to include qualified postsecondary credentialing expenses. It permits 529 funds to cover tuition, fees, books, supplies, required testing, and required continuing education for recognized credential programs and credentials, and it defines which programs and credentials qualify. The change applies to distributions made after the date of enactment.