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GAO report: College savings plans benefit the rich

Few families are participating in a federal program designed to help parents and grandparents save money to pay for their children’s and grandchildren’s college education, the Huffington Post reports. Those who do are primarily wealthy, a December report from the Government Accountability Office finds. Fewer than three percent of families participated in a 529 college savings plan or a Coverdell Education Savings Account in 2010. Of the three percent, nine-out-of-ten families featured at least one parent with a college education. They also had a median income three times larger than the 97 percent of families without 529 college savings plans, and 25 times the financial assets, the GAO found. According to ABC News, the federal government allows distributions from 529 accounts to be entirely tax-exempt if used to pay for college tuition and fees. That tax-exempt status represents an annual loss of $1.6 billion subsidizing college savings plans for wealthy families, which the New America Foundation notes, could pay for an additional 288,000 Pell Grants for low-income students…

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