By Ovetta Wiggins
Democratic legislative leaders in Maryland want to create a small matching-funds program for middle-income and poor families who use the state’s college saving plan.
Under legislation supported by Senate President Thomas V. Mike Miller Jr. (D-Calvert) and House Speaker Michael E. Busch (D-Anne Arundel), families who deposit money into Maryland’s 529 College Savings Plan would receive a matching annual donation of $250 from the state.
“The middle class has been squeezed since the Great Recession,” Busch said. “We need to help families feel like they have economic security and ensure their kids have access to opportunities for success that my generation had.”
The Education Affordability Act of 2016 also would create a tax credit of up to $5,000 for residents who have a student loan debt that exceeds $20,000. The amount of the credit would be based on the amount of debt the resident carries and their annual income.
The matching fund program, which is similar to the employer match for a 401k plan, would be scaled based on income. For example, a family with an income between $175,000 to $225,000 would have to contribute $250 to receive a $250 match. An individual or couple that earns less than $100,000 would receive a $250 match for contributing $25.00. Households with incomes above $225,000 would not get a match from the state.
State officials said that Maryland follows a national trend that shows that 529 plans are largely used by wealthier residents. By offering a match, legislative leaders are hoping that more working- and middle-class families will be encouraged to save for college.
The college affordability measure is the second effort from key lawmakers in recent weeks to make college more accessible. Gov. Larry Hogan (R) last week signed an executive order to create a scholarship program that provides $6,000 to students who graduate from high school early.
The measure, which would cost about $5 million in state funding, is part of a legislative package of bills that leaders say will help middle-class families and which they touted at a news conference on Monday. The bills are the first in a series of bill packages that will be presented by leaders of the majority-Democratic General Assembly during the 90-day legislative session.
Miller and Busch said they are endorsing a bill that would attempt to provide pay equity for women and will continue to support efforts to find ways to help residents save for retirement, rather than depend solely on Social Security.
“Middle class priorities are our priorities,” Miller said. “As a father, and grandfather, these issues of pay equity, college affordability, and retirement security get to the core of what will provide a better future for our children and grandchildren.”
The bill to close the wage gap has been introduced by two female lawmakers in past years but has been unsuccessful. This is the first year that the bill will have the backing of Miller and Busch.
The legislative leaders have previously offered their support for legislation to address retirement security, calling the topic a “looming crisis” in Maryland, where 25 percent of the population is projected to be of retirement age by 2030.
Miller and Busch last year set up the Commission on Maryland Retirement Security and Savings to explore ways to help residents save for retirement. The panel has not completed its work or submitted its recommendations to the General Assembly.