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The Future: Innovative Ideas and SolutionsProposals from Policymakers

College Saving and Financing SummitMay 21, 2008

Jamey Delaplane(202) 662-2294/jmdelaplane@davis-harman.com

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Democratic Perspective

• Skepticism About Industry/Financial Services Motives Concern That Prior Policymaking Too Industry-Friendly

• Distributional Approach to Issues How Do Proposals Affect Individuals in Different Income

Groups?

• Skepticism Regarding Tax Incentives That Track Income Tax Rates Interest in Alternative of Refundable Tax Credits

• Continuing Pressure to Find “Revenue-Raisers”

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529 College Saving Plan Reforms

• Fostering Low- and Moderate-Income Participation Extension of Saver’s Tax Credit to 529 Plans

Promotion of State Efforts to Reach This Population

Interest in Data Collection About Plan Participants

• Promoting Employer Involvement Tax Incentives for Employer Contributions

Requirement for Employer Payroll Deduction

• Expansion of Permissible Expenses

• Promoting Plan Transparency and Comparability

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Financial Aid Expansion/Reform

• Context Concern About Student and Family Debt Levels

Aid Application Process Itself as Deterrent to College

Skepticism Regarding Private Lenders

• Proposals Index Pell Grant Amounts to College Inflation

Eliminate FAFSA and Base Eligibility on Tax Returns

Eliminate Subsidized Private Loan Programs

Student Borrower Bill of Rights

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Higher Education Tax Incentives

• Context Confusion Re Array of Current Higher Ed Tax Incentives Significant Number of Eligible Taxpayers Not Using Benefits Concern Re Distributional Effects of Current Incentives

• Proposals Expanded, Refundable Tax Credit for Higher Education Deliver Tax Benefits at Time of Tuition Payment

• Goals

• Repercussions for Savings Strategies

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Worker Training/Learning Accounts

• Context Response to Job Displacement Due to Trade/Economic

Change Financing Source for Job Retraining/Skill Development

• Proposals McCain Flexible Training Account Proposal

• Financed by Unemployment Insurance Taxes

Congressional Lifelong Learning Accounts Proposals• Financed by Employee and Employer Contributions

• Interaction with 529 Plans

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Retirement Savings Coverage

• Context Frustration Regarding Lack of Plan/IRA Coverage Size of Tax Expenditure on Retirement Savings

• Proposals Payroll Deduction IRA Mandate Mandated Contributions for Those Without Plans Kids Accounts

• Repercussions Rely on IRA Rules That Allow Penalty-Free Distributions for

Higher Education Expenses