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WASHINGTON – Rep. Virginia Foxx, R-N.C., today voted in favor of legislation that would strengthen and improve the investment tool known as a 529 plan, which helps families save for their child’s college education. H.R. 529 passed the House of Representatives by a vote of 401 to 20.

“Paying for college is hard work, and it’s getting more difficult as tuition and fees continue to increase at rapid rates. With student loan debt surpassing credit card debt, we need to do everything we can to encourage American families to save for college and invest in their child’s future,” said Foxx. “The bipartisan legislation we passed today does that by expanding, strengthening and improving 529 plans.”  

Since 2001, students have been able to withdraw earnings from 529 investment plans tax-free if the funds are used to pay for qualified higher education expenses. In January President Obama proposed taxing those withdrawals and treating the earnings as student income, which would hurt a child’s chances of receiving financial aid. After numerous objections from Republicans and Democrats, the White House announced the president would drop the plan.

The legislation would permit the re-deposit of refunds from colleges into 529 plans without taxes or penalties as long as the re-deposit occurs within 60 days of the student withdrawing from the college. It also would eliminate a paperwork burden for 529 plan administrators by removing distribution aggregation requirements, which have been unnecessary since the tax treatment of the plans changed in 2001. Finally the bill would identify computers as a qualified expense.

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U.S. Rep. Virginia Foxx represents North Carolina’s 5th Congressional District and is the elected Republican Conference Secretary. Dr. Foxx is the chair of the House Education and the Workforce Subcommittee on Higher Education and serves as Vice Chair of the House Rules Committee.