Higher education has been under siege for their expensive degree programs with questionable real-world ROI. To protect their bottom line and relevancy, colleges and universities are ramping up their credentialing programs.
But colleges have an unfair advantage over associations. People can use tax-exempt 529 savings plans to pay for college credentialing programs, but not for association programs. Not yet, anyways.
The basics of 529 savings plans
529 savings plans were designed to encourage saving for future education costs. They’re named after Section 529 of the Internal Revenue Code. People can use these tax-exempt plans to pay for qualified expenses, such as tuition, room and board, fees, books, and other supplies for college, university, or other eligible post-secondary educational institutions.
When you hear 529, you probably think of saving money for your kids’ college education, but adults can use this money too. Even if the money was originally intended for their children, adults can transfer the account’s beneficiary status to themselves.
How colleges win the 529 competition
Earnings from 529 savings plans grow tax free if the money is used at eligible higher education institutions:
• Four-year colleges and universities
• Community colleges
• Trade schools
• Vocational schools
An eligible institution is an educational institution that is eligible for Title IV federal student aid, which means associations do not qualify. Yet even though associations offer credentialing programs that are just as valuable, if not more valuable, than college programs, prospective learners can’t spend their 529 money with associations.
The affordability barrier
Expense is a barrier to education. Some employers provide financial support for their employee’s education, but not all. Even when they do, a few classes can wipe out a professional development budget.
Every bit of savings counts when employees have to cover all the expenses themselves, such as:
• Course and program registration fees
• Application and exam fees
• Study group or exam prep course fees
These costs are a barrier for many people who want to enter or advance in a profession or industry.
A change is coming, but your help is needed
You can help fix the 529 problem. ASAE is inviting associations to join them in Tomorrow’s Workforce Coalition.
The Coalition supports the bipartisan, bicameral Freedom to Invest in Tomorrow’s Workforce Act (S. 722/H.R. 1477), which would expand qualified expenses under 529 savings plans to include postsecondary training and credentialing offered by associations.
Tomorrow’s Workforce Coalition’s goal is to see more people lifted up by workforce development policies. They believe the tax savings made possible by this Act would help more people develop the competencies needed to enter a profession or industry, start a new career, or rise up in one.
The Freedom To Invest In Tomorrow’s Workforce Act would allow using 529 plans to help cover:
• Credentialing program tuition, including prep courses
• Testing fees, including practice exams
• Required books and equipment
• Continuing education and credential renewal
• Other fees required to obtain and maintain a credential
ASAE says, “The Freedom to Invest Act would transform 529s from college savings plans to career savings plans.”
How your association can help
#1: Join the Tomorrow’s Workforce Coalition.
Learn more about the Coalition in this membership flyer. Membership is free. Your association is under no obligation to participate in any other way. View a list of the Coalition’s 600+ member organizations.
#2: Sign the Freedom to Invest in Tomorrow’s Workforce Act letter.
Take a few moments to add your association’s name to the sign-on letter.
The Power of Association’s Coalition website has suggestions on other actions you can take, like inviting other organizations to join the Coalition and participating in Coalition calls.
Strengthen the future of your association’s credentialing programs by supporting the Coalition’s advocacy efforts to get this Act passed. Your participation will help open up the transformative power of credentials to current and future industry professionals.