I hear a lot of stories working at a bar in Boulder, a job that helps pay the bills while I go to college at the University of Colorado. But the conversation I had with an older gentleman customer a couple months ago was really eye-opening.
He told me about how, like me, he grew up in Colorado in a working-class family and had multiple siblings. But he attended college in the 1970s and had a really different experience. Like me, he worked all the way through college, but ended up leaving with no debt. So did his five siblings. Part-time work alone paid enough to get a college degree and pay living expenses with no debt back then.
Contrast that with my situation, which is typical for students in my generation. I have $50,000 in student loans to help pay for school and still have to work to make ends meet.
There is a bill in the legislature, though, that will help families like mine better afford college. House Bill 1003, sponsored by Reps. Brittany Pettersen and Dave Young, would restructure the state’s 529 college savings program to give middle-class families a bigger tax deduction.
Under a 529 program, families who save for college can put money into a special account and then spend it on college expenses without that money counting against their federal income tax liability. A lot of states, including Colorado, also give a state income tax deduction for 529 expenditures.
Colorado’s 529 program, though, has no limit on families’ income. In other words, the wealthiest households in Colorado get the same tax deduction that all other families get.
The result is that a hugely disproportionate amount of the tax break ends up going to the highest-earning families, with 44 percent of the benefit going to households who make more than $250,000 a year. These are families that don’t need an incentive to save for college.
Under HB 1003, the incentives in Colorado’s 529 program would be tilted more to middle-class families. Families making from zero to $150,000 a year would get double the state income deduction or 200 percent, while families earning from $150,001 to $250,000 would get a 150 percent deduction and families earning from $250,001 to $500,000 would get just a 15 percent state income tax deduction.
Let’s break that down. For example, a taxpayer making $75,000 per year who saves $100 in a Colorado 529 plan currently can take a $100 deduction from their Colorado income tax. Under the bill, the same taxpayer would get double the current deduction, receiving their initial $100 tax deduction and an additional $100 matching deduction from the state.
The bill wouldn’t affect the federal tax benefit to higher-income families. The idea is to shift the state tax incentives to families who need them — families who make too much to qualify for heavy financial aid but not so much they can easily afford college.
These are families like mine, from Sterling, headed by a single mom who worked as a corrections officer until she got injured and who now jumps from part-time job to part-time job. I’m the first person in my family to attend a four-year college.
Looking at the debt I’ve accrued, I’ve wondered sometimes if it’s all been worth it. I’ll be paying off my college loans for many years to come. I’m banking on the principal that I will be better off financially and in other ways over the long run because of my college degree.
Public universities like CU were established so that middle-class students could get a quality education. HB 1003 helps reaffirm that idea by looking out for the backbone of Colorado — the middle and working classes.
Linsi Bowers is a senior at the University of Colorado Boulder who is studying sociology. She is from Sterling.
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