All sorts of bad things are buried in the new tax law. Here’s one: a huge payday for the student loan industry, as described in an Alternet post by Mary Ann Schlegel Ruegger.
“The GOP tax bill’s inclusion of 529 plans for K-12 private tuition has been widely criticized as yet one more provision that aids the wealthy. That’s because only wealthy families have enough money on hand to sock away $10,000 a year toward each child’s K-12 private school tuition. There’s been little mention of what these plans could mean for middle and lower-income families. By discouraging them from using 529 accounts for long-term college savings, these families are being set up for a future of indebtedness.
“Here’s the problem. These savings accounts were meant to offer tax advantages to families in order to help them to put money away for college. Expanding the use of 529 accounts to cover K-12 expenses encourages families to spend money on private schools now. When it’s time for those families to pay for college, their 529s or other college savings will be less— or nonexistent. Worse, GOP policy makers are providing just the “nudge” to convince these families to enroll in or justify staying in private schools they really can’t afford (even with vouchers), and make up the gap with private loans. The 529 provision in the tax bill is more than anything else a boon to the growing K-12 private school loan industry.
“Unlike higher education, where a student borrower’s financial relationship with colleges and lenders is well defined by federal and state laws, K-12 private education is a largely unprotected landscape.
“Take Indiana, for instance, home of the largest private school voucher program in the nation. Despite paying out $146 million last year in publicly funded tuition vouchers for private schools, the Indiana Department of Education doesn’t even have the right to see the enrollment contracts or student handbooks that govern the payment policies on that money, let alone provide any consumer protections to students who attend those schools. Unlike colleges, private schools at the K-12 level are almost completely free to impose whatever enrollment and financial policies they please. Lenders for K-12 also face far fewer restrictions than lenders for higher education.”
Read on, there is more, and you will learn who benefits.
Diane Ravitch's blog 
This was my immediate reaction to the first news that this provision was in the House bill. Not good policy. If you need help paying for private K-12, then you’re going to need a lot more help paying for college. I have several friends who will make use of this provision. They make less money than I do, but they are sinking an astonishing amount of money into private school — maybe 50k to 60k per year. There is no way they can afford to be saving enough for college. I know this because I’m having trouble doing it myself. They’re committing financial suicide, when they could be using any one of the outstanding public schools in NYC.
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If they can sink 50-60 k a year into private schools they can send their kids to NYU or Harvard as well . Of course that depends on how many kids we are talking about . But is that not the case with this tax cut, that it is being diverted to those who need it least.
But there was another piece in Alternet that cheered me up a little.
https://www.alternet.org/news-amp-politics/republicans-get-their-tax-cut-holy-grail
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We’re talking about people with household incomes under 200k. They’ll be able to send their kids to college, but not without crushing debt, or forgoing retirement.
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FLERP!
I had an income in the range you are talking about . Of course with a tremendous number of hours put in . But I could not imagine spending 60k a year on Private schools and living in metro NYC . But so be it .
You deserve crushing debt if that’s your choice.
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“They’re committing financial suicide, when they could be using any one of the outstanding public schools in NYC.”
:thinking face emoji:
Where are these outstanding public schools of which you speak? Ones that aren’t in high-priced zones (talk about financial suicide!) or require your four-, ten-, or thirteen-year-old kid to outperform other children on admissions tests, state tests, report-card grades, or auditions?
If the parents you are referring to can scratch together 50-60 large per year for an elite private, scratching together the same amount should go a long way toward covering the bill at an elite private college. From what I know about the elite privates’ teaching, facilities, lifetime networking opportunities, and deep institutional investment in college placement, I don’t think your friends are making a indefensible choice.
(That said, I agree that it is a terrible idea to allow 529 plans to be used for K-12 expenses. In NYS it’ll be a subsidy for the most fortunate; in lower cost-of-living states it may accelerate the formation of likely lower-performing for-profit K-12 schools.)
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Tim,
They could always sign up for a no-Excuses charter school, where they would be mentally and emotionally abused, then pushed out if their scores are low.
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All the best available evidence shows that NYC charter schools, which serve a student population likely to be affected by poverty-related transience, have attrition rates similar to and even lower than demographically comparable nearby NYC DOE traditional public schools.
Click to access 2015schoolattrition.pdf
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Tim,
How many children with serious disabilities, cognitive disabilities, muscular dystrophy, cystic fibrosis, etc. are enrolled in your precious charter schools? How many homeless children? How many children who don’t speak English?
Please let us know, Tim, and when you do, please replace that piece of coal in your chest with a beating heart. It’s Christmas time.
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The analysis I linked to provides most of that information.
Children with the most serious disabilities aren’t educated in neighborhood schools. They attend District 75 schools, or, increasingly, private schools with tuition paid for by the DOE. Interestingly, many of those private schools are not unionized and do not offer tenure to their teachers.
Speaking of warming hearts, I thought that you, Juan Gonzalez, John Merrow, and everyone else who has expressed such deep ongoing concern for the well-being of the children at Success Academy who did not gain entry to the specialized high schools of their choice would be thrilled to see the early decision college acceptances for those kids:
https://www.successacademies.org/education-blog-post/success-academy-founding-seniors-we-are-so-proud/
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Sorry, Tim, I have been to regular nyc public schools that do have children with severe disabilities and do enroll English learners. Even my antiquated public high school in Texas in the 1950s had children in wheelchairs.
But not Eva.
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These would be schools that require your ten or thirteen year old to outperform other children on tests or auditions.
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A new category of people is being created in the grand, right wing, divide and conquer game: people who can afford private k-12, but then can’t afford even a public university. They will come to resent people who attend public k-12 and can afford to attend a university. They will want a special category of college tuition assistance, and k-12 public school attendees come to will resent voucher recipients. Everyone will blame each other. No one will blame the wealthy who caused the rift. Bankrollers make a killing on every last deal. Brilliantly planned and executed, down to the last detail. The enemies of social democracy are smart.
We progressives are not going to stop them without a better, long term strategy. We have the numbers, but everything is gerrymandered and rigged to prevent a collective voice from speaking. If I were a progressive billionaire, I would start by initiating a tuition-free university, and seeking an army of liberal intellectuals to volunteer their time.
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Yesterday the German Press Agency reported that Diamler (Mercedes Benz) and BMW expect to earn an additional 1.7 billion and between 0.95-1.55 billion Euros, respectively, because of the tax cut. This money will go to the corporate headquarters in Germany, not their factories in the U.S. Those funds are on top of their respective expected annual profits of 9.9 and 7.3 billion Euros. The article noted the irony that our Dear Leader complained earlier this year about the glut of Mercedes, not Chevrolets, he saw on the streets outside his office on 5th Ave. It also reflected on his “threat of a 35% tariff on US imports” from a BMW factory in Mexico that will build 3 series cars for the world market. The article concluded that there were no changes expected in the forecasts or business plans of each despite the tax bill windfall. Implied in that, of course, is that they would also not have changed anything if there were no tax bill.
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http://cepr.net/publications/op-eds-columns/corporations-are-trying-to-sell-the-gop-s-narrative-on-tax-cuts
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