In a perfect world the government, educational institutions, lenders, parents, and students would all come together to make college available and affordable. If you try to eliminate any of the players and try to create a plan, your plan will fail. If any one group could solve the financial aid problems without involving the others they would have long ago! No, they are stuck with each other.

But that’s not all bad! Take the so-called 529 plans. This is what legislation is meant to do! The federal government has set up 2 kinds of 529 plans that are managed at the state level. One option is to pre-pay for tuition. The funds are usually guaranteed and can be applied for tuition at participating universities in the state of residence.

The other option is to invest in state sponsored low-risk mutual funds with after-tax dollars. In this kind of 529 the distributions, including earnings, are tax free when used to pay tuition and other associated cost of college. With these plans, parents and students can prepay or invest over time before the student begins college. The distributions cannot be used to pay on student loans and there is some risk, but the funds can be used for out-of-state tuition.

Parents and students can save for education while benefiting from tax savings. In some of the pre-paid plans they can lock in the tuition price for future savings.

Lenders like 529 plans because they get cash for investment in mutual funds. Since part of the tuition is already taken care of, parents and students need to borrow less. That means less risk for the lenders. Since the distributions cannot be used to repay loans they are not competing against themselves.

Universities like the programs because they can lock-in students early while getting an infusion of cash.

That just leaves the government. Unlike some other programs, the federal government has passed the execution of the plans to the state. State governments like this because they understand the needs of the students and the situations of the parents in their states better than the sweeping generalizations needed in federal legislation. To a large extent, the State passes the administration of their plans onto the lenders and universities and sets up a system of checks and balances to monitor the programs.

Contrasting this successful plan to the plans currently being considered by Congress is like comparing ice cream to spoiled milk. 529 plans are pre-emptive. They help parents and students before the debt is incurred. It’s a valuable education in fiscal responsibility! The proposed legislation is reactionary. It makes assumptions that can’t be verified while giving the federal government more control over your future.

With the FFELP program and the 529 plans, the future of student financial aid is looking more secure than ever before. Sabotaging these long-term solutions for short-term political gain is a betrayal to tax payers!

We are opposed to the proposed student loan legislation and middle-class families should be too! The government is taking money out of YOUR POCKET.

It only takes one minute to make a difference: call your senators, send your senators an e-mail, download a letter to fax to your senators, become part of our petition and help your friends find out the truth about the proposed student loan legislation.