Hinson, McDonald Rivet Introduce Bill to Make Child Care More Affordable

Washington, D.C. — Congresswomen Ashley Hinson (R-IA-02) and Kristen McDonald Rivet (D-MI-08) introduced the bipartisan Early Education Savings Program Act. This legislation would address barriers in accessing child care by expanding 529 savings programs to cover child care expenses and increasing support for early childhood education. 

“Access to child care is a women’s issue, a family issue, and a workforce issue, and no two families have the same needs or circumstances. That is why I’m proud to help introduce bipartisan legislation to expand savings programs parents can use for child care, while also supporting early childhood education. I’ll continue working across the aisle to make child care more affordable, flexible, and accessible for families because supporting parents strengthens our workforce and helps build a stronger economy, and community, for everyone.” — Congresswoman Ashley Hinson

“Every parent knows raising a family is way too expensive. When parents can’t access affordable child care, they can’t go to work, and both their families and our economy suffer. Expanding 529s to cover child care is an easy and important step that will help families save for and afford child care for their young kids.” — Congresswoman Kristen McDonald Rivet

Background: 

Child care affordability is a crisis for America’s workforce and is a women’s and family issue. The U.S. Chamber of Commerce estimates states lose $1 billion per year in economic activity due to a lack of affordable and accessible child care. The same study also found that absences and employee turnover, which often stem from a lack of child care, cost employers between $400 million and $3 billion a year. 

• A solution to the affordability crisis for families and the workforce shortage crisis is a dedicated, tax-advantaged savings program to set aside tax-free income to be used for qualified child care expenses.
• A 529 plan allows individuals to use invested dollars to pay for qualified education-related expenses.
• Originally intended to assist with higher education, 529 plans were expanded in recent years to also cover K-12 and apprenticeship programs.

Specifically, the Early Education Savings Program Act: 

• Expands 529 savings programs to cover qualified child care expenses, allowing parents to use tax-free income on child care.
  • Qualified child care is defined as child care provided by a State-licensed, regulated, or registered center-based child care provider, family child care provider, or another provider of child care services that is not an individual related to all children for whom care is provided.
• Establishes that the designated beneficiary must be under 5 years old.
• Does not put a cap on contributions or balances used for child care expenses within these accounts.