Senator Seeks to Expand Education Savings Plans

Clinton pledged to review a bill offering an alternative to 'vouchers,' but he's already nixed the idea once.

Attempts in Congress to give parents more education choices for their children are often stymied by one key dispute: whether public funds can be spent on private schools - especially religious schools.

In an effort to skirt that debate, Sen. Paul Coverdell (R) of Georgia is proposing a new "education savings account." Parents who put their money in such accounts would be able to use the proceeds, tax-free, to pay for education expenses from kindergarten through college - whether public, private, sectarian, or home-based.

While the plan probably has majority support on Capitol Hill (Speaker Newt Gingrich is a sponsor in the House), it nonetheless faces an uphill fight - again. The White House has already made clear its dislike of the idea, insisting that it be stricken from the federal tax-cut package approved over the summer.

But Senator Coverdell is eloquent in defense of his idea - and practical about lining up support for it this time around. At least two Democrats, Sen. Robert Torricelli of New Jersey and Sen. Joseph Lieberman of Connecticut, are supporting it.

"It's ... an independent, free-standing concept that can become a ... creative force in adding new resources to education in general ... with the flexibility that allows parents to guide those resources toward specific problems and requirements that the family is confronting," Coverdell says.

Under the plan, parents could deposit as much as $2,000 a year per child in after-tax dollars. The accrued interest in the account would be free of tax if it were spent for a child's education at any school.

Assuming a 7.5 percent interest rate (higher than currently available at a bank), parents, grandparents, or "scholarship sponsors" who deposit the maximum amount beginning when the child is an infant would have $14,488 available by first grade, $36,847 by junior high school, and $46,732 by high school, according to figures supplied by Coverdell's office. The money could be spent on a variety of things, such as a home computer, special-needs therapy, private-school tuition, or home-schooling expenses.

(The program would expand on the "education IRAs" recently enacted in the federal tax-cut bill, which are limited to payments for post-secondary education.)

SUPPORTERS emphasize that the "A-plus Education Savings Accounts" are not a voucher program, which the president, many Democrats, and some Republicans oppose.

"I support this program because it encourages parents to invest in their children's education, and because it does so without taking a single federal or state tax dollar away from our public school system," Senator Torricelli says.

Opponents, however, call the plan "a back-door subsidy for private and religious school tuition."

"Most people would agree the federal investment is supposed to be to improve the schools that admit every child, that are willing to educate every child, to create an educated democracy," says Adele Robinson at the National Education Association. "This starts us down the path of saying that the federal role is also to subsidize private or religious schools, who by right are not required to admit or educate every child."

Ms. Robinson also objects to "giving a tax benefit to wealthy families because they chose private or religious schools over public schools."

Coverdell's bill had been attached to the tax-cut measure approved in July. Eight Democrats were among the 60 senators voting in favor. But President Clinton threatened to veto the whole package if it contained educational savings accounts, saying they "undermine public education by providing tax benefits for private and parochial school expenses." The president, however, agreed to meet with supporters this fall to discuss the issue further.

Coverdell says he is baffled by the opposition. "The administration has endeavored to, wittingly or unwittingly, make this a debate over vouchers, which it is not," he says. Viewing a tax exemption as a subsidy would make the new tax-relief package a financial subsidy, too, he argues. "That money you haven't taken from people who earned it is somehow a gratuity from the federal government." Coverdell expects the bill to come before the Senate later this month or in early October.

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