Virginia lawmakers are hoping to push a new bill that would allow 529 saving accounts to be used for workforce training and accreditation programs. This bill is being led by Virginia congressional representatives, Rob Wittman and Abigail Spanberger.
This new bill would be a change from just allowing the money to be used for a traditional four-year program. This bill is called the “Freedom to Invest in Tomorrow’s Workforce Act.” It focuses on the fact that many Virginians take different career pathways, such as skilled trades and nursing.
The 529 savings plan helps families save for college tuition and related costs. Under the current program, students can use 529 funds for registered apprenticeships, but not post-secondary training or credentials.
Leslie Crudele, Government Relations Director at Virginia 529, says, " What we are seeing is this type of initiative where you are allowing the 529, which is usually used for four-year degrees, bachelors, higher educations pathways, they are not able to be used for these credentialing programs. So, families are at a bit of a disadvantage if they have been saving in a 529 and then they have to take the money out to use for a credential program. There may be a tax implication there.”
If families want to withdraw money from the plan and use it for a non-eligible program, they could pay a tax on this income. Sometimes that rate could be as high as 10%.
This new bill could help bridge the gap for high-demand jobs, such as nursing, construction, and technicians. The goal is to expand the 529 to a broader population of students.
“We know that a lot of students that are coming out of high school and don’t know what they want to do. They don’t want to take the traditional four-year degree pathway. This is a great opportunity for them to get skill training. Maybe go down the trade route and just get that training that they need to enter the workforce. Or for a lot of students who have been in the workforce, to get the training they need to keep advancing in the workforce,” says Crudele.
Crudele says they are hoping that the bill is passed by the end of the year. This way, students could start using the funding in 2024.