Senate Bill Wants to Help Homeschoolers Save for Education

A bill introduced in the U.S. Senate earlier this year is seeking to increase educational savings options for homeschool parents.

Under the proposed Enhancing Educational Opportunities for All Students Act, a Coverdell Educational Savings Account could be used in the future to pay for homeschool expenses. Currently, a Coverdell can only be used for a named beneficiary to cover college expenses or costs associated with certain elementary and secondary expenses at public and private schools.

“Coverdell Education Savings Accounts (ESAs) are not an attempt to provide federal money to homeschoolers, nor are they an attempt to exert federal control over homeschools,” wrote Andrew Mullins, the deputy director for HSLDA federal relations. “Rather, they are a way that families can put some of their own money into a savings account and let it grow, tax-free.”

Seeking to give homeschoolers equal opportunities, Senator Mike Lee of Utah is the sponsor for the bill. Ted Cruz of Texas and Mike Crapo of Idaho also are associated with the proposed change.

“Coverdell accounts work like a Roth IRA,” Mullins clarified. “After-tax money can be placed by an individual into their own account. There it can grow, collect interest, and be withdrawn for eligible expenses, without having to pay additional taxes. Families who use Coverdell ESAs can even invest the funds into stocks, bonds, and mutual funds.”

Although one of the major purposes of a Coverdell is to save for college, some financial advisors suggest using the accounts primarily for elementary and high school expenses because money in a Coverdell can affect financial aid when applying for student loans.