Federal comments requested on College 529s

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http://www.nasfaa.org/publications/2009/fr529treasury072809.html


Federal Register: July 28, 2009
Volume 74, Number 143








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DEPARTMENT OF THE TREASURY


Report on Section 529 College Savings Plans

AGENCY: Departmental Offices, Treasury.

ACTION: Notice and request for comments.

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SUMMARY: The Department of the Treasury invites the general public to
submit information pertinent to a report it will issue on Section 529
college savings plans. Such information could include data, research
studies, opinions citing hard data, or references thereof. The report
is an initiative of the Middle Class Task Force chaired by Vice
President Joe Biden and was announced in an April 17th press release
that can be found at http://www.whitehouse.gov/the_press_office/
Middle-Class-Task-Force-Holds-Meeting-on-College-Affordability/. The
report will examine how people save using 529 plans and whether they
are taking appropriate steps to manage risk. In addition, the report
will identify options and best practices for making the 529 plans more
effective.

DATES: Written comments must be received on or before August 14, 2009,
to be assured of consideration.
Submission of Comments: Please submit comments electronically
through the Federal eRulemaking Portal--``Regulations.gov.'' Go to
http://regulations.gov, select ``Department of the Treasury'' from the
agency menu to submit or view public comments. The ``How to Use This
Site'' and ``User Tips'' links on the Regulations.gov home page provide
information on using Regulations.gov, including instructions for
submitting or viewing public comments, viewing other supporting and
related materials, and viewing the docket after the close of the
comment period.
Please include your name, affiliation, address, e-mail address, and
telephone number(s) in your comment. All statements received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. You should submit only
information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: [email protected].

SUPPLEMENTARY INFORMATION: The Treasury Department is particularly
interested in data, research studies, opinions citing hard data, or
references thereof, relating to the specific questions set forth below.
1. To what extent are Section 529 savings plan investment options
prudent and to what extent do they accommodate reasonable attitudes
toward risk?
2. To what extent are Section 529 savings plans invested wisely?
a. Is there a tendency for accounts to be too heavily invested in
equities?
b. To what extent do account owners sell equities when prices are
falling and buy equities when prices are rising?
c. Should plans take steps to better assist account owners in
making prudent investment choices? If so, what steps would be
appropriate?
3. To what extent are Section 529 savings plan account fees
reasonable?
a. How do fees compare with similar retail mutual funds, and what
factors might explain any differences?
b. How much variance is there in fees across plans for a similar
investment option, and what factors might explain any such variance?
4. To what extent do low- and middle-income families benefit from
Section 529 savings plans and Section 529 prepaid tuition plans?
a. How do the financial incentives for participation vary with
family income?
b. How does financial aid eligibility affect the financial
incentives for participation?
c. How are contributions, account balances, and tax benefits
distributed across income groups?
d. Controlling for initial family attitudes toward education, does
having a Section 529 savings account increase the beneficiary's
likelihood of attending college?
e. Are state matching grants an effective means of encouraging
Section 529 contributions from low- and moderate-income families?
f. Are tax subsidies for saving the most cost effective way to make
college

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affordable for low- and middle- income families?
5. Do prepaid tuition plans assess a reasonable premium in exchange
for reducing participant risks with respect to investment returns and
increases in the cost of attending college?

Alan B. Krueger,
Assistant Secretary for Economic Policy.


BILLING CODE 4810-25-P


Posted 07/29/09 to www.NASFAA.org. Please submit Web site questions or comments to [email protected]


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What I would like to see would be a tax deductible federal prepaid tuition plan. I would propose tying it to a Zero Coupon Treasury Inflation Protected Securities coming due when the kid is in college. The schools, to continue to receive other federal funds, agree to accept the Treasuries for tuition rated on the tuition base when they were purchased (the par value). I would go along with some premium on them (no more than 10% over par value for a newborn for example) laddering down to 0% for an 18 year old if being used in the next four years.

Comments?