Senate Passes Bill on Educational Savings Accounts

WASHINGTON — Senate Repub-licans succeeded in passing a bill supporting an educational IRA plan that President Clinton has vetoed twice in the past two years.
The bill, costing $7.7 billion over 10 years, would make savings in prepaid tuition plans tax free and expand tax breaks for employer-provided educational assistance.
Sen. Robert Torricelli, D-N.J., is a co-sponsor of the bill, which passed by a 61-37 vote thanks largely to Republicans who contend that the key to improving education is to give local schools and parents more control over education dollars.
The bill also would allow parents to place as much as $2,000 per child in educational savings accounts each year. The tax-free interest could be used for expenses — including transportation and tutors — associated with any public, private or parochial school from K-12. The education IRAs would expire at the end of 2003.
The House plans to act on the measure later this year.
Should it pass in the House, however, it is still unlikely the bill will become law.
White House administrators threatened to veto the bill last month, saying it "fails to advance education reform and distracts from the need to invest in public schools, where the vast majority of our students learn" and "does nothing to reduce class size, improve teacher quality or help students meet high academic standards."
Democrats say education money should go toward hiring more teachers and building as well as repairing schoolhouses.
Torricelli says the president laid the foundation for education savings accounts when he pushed the current program, which allows parents to contribute up to $500 a year with tax-deductible earnings available for college expenses such as tuition and books.
Torricelli and Coverdell argue that their plan would lead to an education spending infusion of $12 billion, and that the main beneficiaries would be middle-class families with children in public schools.