Helping UW System students pay tuition was foremost on the minds of state Assembly representatives Tuesday morning at a meeting of the Colleges and Universities Committee at the Capitol.
Of the three bills the lawmakers debated, the most contentious discussion involved Wisconsin's EdVest II program. EdVest allows families to put money into investment portfolios that grow, tax free, until the beneficiary starts college. The program is part of a federally authorized tuition savings program collectively referred to as \529 plans.""
Current state law says that if residents contribute to a portfolio, they can earn a tax deduction on $3,000 of the investment per year on their tax returns, as long as it is to the Wisconsin EdVest program and not to another state's investment plan. Rep. Spencer Black, D-Madison, said this allows the average family to save about $200 on their taxes.
But Rep. Stephen Nass, R-Whitewater, wants to extend this benefit to residents that contribute to an out-of-state 529 plan.
""State tax law shouldn't penalize these families for determining which 529 plan is in their best interest,"" Nass said.
But other legislators were skeptical. Black said he worries the proposal will cost the state up to $13 billion per biennium if the law is changed.
Rep. Rob Kreibich, R-Eau Claire, who chairs the Colleges and Universities Committee, questioned whether the $3,000 limit is a high enough limit.
""Are there a lot of states going higher than [the $3,000 limit] and is that something we need to look at in order to keep [Wisconsin] competitive?"" Kreibich asked state Treasurer Jack Voight, who oversees the EdVest program.
Voight said that is not easy to determine, because some states, like New York, offer unlimited deductions, while 28 states do not offer any tax incentive whatsoever.
The legislators also discussed two other bills involving tuition for UW System students. One creates a gift certificate program that would allow people to ensure the money they give to a student to use for tuition actually goes toward tuition. The other bill would allow exemptions for nonresident tuition if the student is a dependent of someone who is both active in the armed forces and eligible for Wisconsin veterans benefits.
Kreibich, who noted the UW System favors the passage of all three bills, said the Colleges and Universities Committee will take action on the bills in March.
