Education Savings Accounts for Elementary and Secondary Education

Publication Date: August 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Education

Type:

Abstract:

The Taxpayer Relief Act of 1997 (P.L. 105-34) authorized new education savings accounts (then called education IRAs) for higher education expenses. From the time of enactment, attempts were made to increase the $500 annual contribution limit and allow accounts to be used for elementary and secondary education, including private and religious schools. Legislation to accomplish these objectives passed in both the 105th and 106th Congresses but was vetoed by President Clinton. The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16) that President Bush signed on June 7, 2001, includes these changes, effective after 2001.

The most prominent issue they raise is whether the federal government should assist families whose children are educated in private schools. Policy questions include what effect such assistance might have on public schools and student performance and whether it would be constitutional. Concerns have also been expressed that the legislation would create compliance problems and is most likely to benefit better-off families. P.L. 107-22 renamed the accounts Coverdell education savings accounts.