The U.S. Senate passed a controversial - and expensive - college education finance bill Thursday that may face opposition because of one section that critics say would benefit only well-off families.
The $4.3 billion legislation uses tax breaks to help students and families save for college tuition, pay back college loans and attend graduate school.
While these aspects of the bill have met with little dispute, controversy surrounds a section which allows parents to put up to $2,000 a year into a tax-free, federal government-sponsored savings account specially earmarked for their children's education. Current legislation allows parents to place only $500 per year into these special accounts, and when parents withdraw the money it is taxed as if it were the student's income.
Education School Dean David W. Breneman criticized these measures, pointing out that those who benefit from it are "obviously people who are wealthy enough to generate savings.
"These are not going to help low-income people," Breneman said.
This section of the bill also allows parents to use the money in the account for private elementary and high school education instead of just at the college level.
Currently, money invested in both state and private institutions' education savings plans is tax deferred, meaning the investor must pay taxes on it when he withdraws the money from the special account.
Under the new bill, the money in these accounts would become permanently tax exempt.
The bill also would end the 60-month limit on how long people who take out student loans can deduct them from their taxes.
The legislation will continue a tax break for employer-provided education through 2004 and will add graduate-level study to the tax break.
Larry J. Sabato, government and foreign affairs professor, explained that political motivations may affect the final fate of the legislation.
"Clinton and the Democrats cannot afford to let the Republicans take a piece of the education issue," Sabato said, adding that Bush has made education a centerpiece issue of his presidential campaign.
Clinton is expected to veto the bill.
The 61-37 vote was divided down the U.S. Senate's party lines.
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