Oregon Watchdog: Oregon House urges Fed fix to College Savings Account losses

OFFICE OF THE SPEAKER
SPEAKER DAVE HUNT

PRESS RELEASE: March 16, 2009
CONTACT: Geoff Sugerman 503-986-1210

Oregon House Urges Congress to Help Families Who Lost in College Savings Accounts
Federal Fix would allow College Savings Fund accounts to be used to repay student loans

SALEM – The Oregon House today passed HJM 10, urging Congress to allow parents who lost money in 529 college savings plans to use those accounts – once they have recovered – to pay back student loans.

In Oregon and many other states, some 529 plans saw large losses due to similar declines in the stock market. For families who have students ready to enter college or are in college now, the loss of those funds could be disastrous. This plan, if approved by Congress, would allow parents to use funds from their 529 plan to pay back student loans they need to take to afford college right now.

“This is one of the many options we are exploring to ease the pain those who lost money in the Oregon College Savings Plan account are feeling right now,” said Representative Sara Gelser (D-Corvallis), Chair of the House Education Committee. “We must do everything possible to open doors for Oregon’s young people to access higher education.”

“Parents invested in what they thought were safe accounts, but because of recent losses some are now having trouble paying for college,” said Representative Chris Harker (D-Beaverton), who carried the Memorial on the floor. “If Congress acts now, these parents will still be able to fulfill their dream of sending their kids to college.”

Speaker Dave Hunt said efforts to help families recover from the losses suffered in 529 accounts will provide a long term benefit for the state.

“We’ve been working hard to ensure that even in the face of this economic disaster, our children can afford to go to college,” said Hunt (D-Clackamas County). “Education for our children must continue to be a top priority as we recover from the economic downturn facing Oregon and the nation. This simple federal change is one way we can protect families with college-age children in their households.”

Investments in Oregon College Savings Plan accounts grow tax-deferred, and can be used to pay for “Qualified Higher Education Expenses,” which currently include tuition, room and board, and books and supplies. Student loan repayment is not currently considered a “Qualified Higher Education Expense.”
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