Section 529 College Savings Plans Amendments

Floor Speech

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Mr. TED LIEU of California. Mr. Speaker, this is a final amendment to
the bill which will not kill the bill or send it back to committee. If
adopted, the bill will immediately proceed to final passage, as
amended.

Let me start by thanking my Republican colleagues for introducing
this bill. It makes changes to 529 plans that many on my side of the
aisle have also been calling on for years. I support 529 plans, as do
many of my constituents. It helps people plan and pay for college, and
my wife and I currently invest in 529 plans.

There is one amendment to this bill that, I believe, will make it far
better, and that is disclosure. The motion to recommit would put in an
amendment that says that there has to be a separate report that talks
about the types and numbers of fees and how much these fees are and how
they impact the performance of the product over 10 to 20 years.

Prior to entering politics, I served as a corporate vice president at
a financial services company, and it is clear that the foundation upon
which Wall Street rests is disclosure. It is the social compact that
Wall Street has with Main Street. It is the compact that they have with
investors in that they will describe a product--how it works, the fees
on that product, and how it performs. By having a separate report that
parents can see, one that talks about the fees on these products and
how these fees impact the performance, it will allow middle class
families to better gauge for themselves how their investments are doing
and which investments to select. Does this makes a difference? Yes, it
does. Let me give you an example.

Savingforcollege.com offers this scenario:

If an annual return for a 529 account is 7 percent and if one account
charges 20 basis points and another charges 40 basis points, here is
the difference on an investment of $5,000: over the course of 18 years,
the 529 plan charging the lower fees will save the investor $542. The
underlying bill would change existing law to allow 529 funds to be used
to purchase a laptop computer for school, and $542 would allow you to
buy a laptop.

Right now, every State has different rules for disclosure, and they
have different fees. For example, in my State of California, we have
relatively low fees that range between $142 to $154 over 10 years, but
then you have States like Montana and Arkansas, which have some of the
highest low-end fees, which could range between $1,100 to $1,200 over
10 years. That makes a huge difference to middle class families.

I urge my colleagues to support this motion to recommit, which merely
provides disclosure to middle class families so they can better
understand their 529 plans.

I yield back the balance of my time.

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