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Career education is a vital pipeline to high demand jobs in the workforce. Students from all walks of life benefit from the opportunity to pursue their career education goals and find new employment opportunities. Join Dr. Jason Altmire, President and CEO of Career Education Colleges and Universities (CECU), as he discusses the issues and innovations affecting postsecondary career education. Twice monthly, he and his guests discuss politics, business, and current events impacting education and public policy.
Jason Altmire [00:00:00]:
Welcome to another edition of Career Education Report. I'm Jason Altmire. And today we're going to talk about sort of a niche issue, but it's a very important issue in higher education related to 529 savings plans and some legislation that is pending in Congress to expand the ability to use those type of plans at different schools. And we have with us as our guest, Kyle Hayes. He is the senior senior director of Public Policy at the American Society of Association Executives. Kyle, thank you for being with us.
Kyle Hayes [00:00:40]:
Yeah, Jason, thank you for having me.
Jason Altmire [00:00:42]:
The American Society for Association Executives, ASAE is the acronym. And I like to talk about ASAE in part because I'm an active member myself. But you hear a lot of talk about associations in Washington in particular, and in state capitals. And there's over 200,000 associations across the country from the local level all the way up to the big national associations. And you know, when people talk about lobbying and advocacy and public policy, there really is an association that represents literally any constituency you can imagine, even associations themselves, which is what ASAE represents. So maybe first just give a little bit of an overview on what is ASAE and why are they taking an interest in the 529 issue?
Kyle Hayes [00:01:37]:
Yeah. So as you mentioned, we are kind of known at ASAE as the association of Associations. So our members include leading professionals that work at trade associations or professional societies. We've got 50,000 individual members who are a part of ASAE and about 7,500 organizations that are also a part of ASAE. And really our mission is to provide education and support to help those leaders better run their association so that whatever sector, whatever industry that they're serving, they can do that better in their day to day work. But why this bill matters so much to us is one of the main activities of many of the associations in our memberships is workforce development. So they're doing things to connect people to training in in demand industries or they're doing things like establishing certifications so that any professionals active in that, that that association represents that they're meeting the industry standards to provide effectively whatever service or good you're providing in that industry. And so that's where this bill, the Freedom to Invest in Tomorrow's Workforce act, is really critical to our membership because it helps along a lot of the activities that our members of our association are doing every day.
Jason Altmire [00:02:56]:
And you have an excellent background to be sort of the face of that issue for ASAE because you used to work for one of the more high Prof. Industries where workforce Development is such a big issue, and that is commercial truck drivers. And there's an 80,000 shortage as we speak of truck drivers. So you know the issues. You've worked in the career sector before, so maybe talk a little bit about how that experience informs the work that you do now in advocating for the larger group of associations.
Kyle Hayes [00:03:31]:
Yeah, so I think trucking is one of the clearest examples of how just a little bit of assistance for somebody who's looking for a new career can get them quickly trained and quickly into a job where they can support their family, they can have a job that has growth potential throughout their career. And so, yeah, I was at the Commercial Vehicle Training association, which is a member of ASAE before I came to ASAE and we represented that membership on the Hill. Some of those members are also a part of your organization, Jason. And that's really where I sort of learned firsthand how important getting just a little bit of financial assistance is to folks who maybe didn't do well in K through 12 education. Maybe some of that type of education really wasn't for them. But they can find opportunities in any number of industries where, you know, employment is really in demand. And trucking is definitely one of those. Get a little bit of assistance, get training in the trucking industry.
Kyle Hayes [00:04:31]:
It's about four to six weeks of training, about five to $7,000 of cost for some schools. If you have broader programs, the cost can be higher at other schools, but that pales in comparison to the cost that you would invest in a traditional four year college degree. But you get connected to employment right away after a short training program like that. So I think it's just a great example of how a bill like this can help people find new careers or change careers in the middle of their career. And a little bit of assistance can make that possible.
Jason Altmire [00:05:05]:
Talk about as it relates to 529 plans in particular, for those that may not be as Familiar, what are 529 plans? How are they funded and what can you use them for currently?
Kyle Hayes [00:05:17]:
Yeah, so 529 plans are to date have really been known as sort of college savings plans. So a parent, a sibling, a grandparent, any other family member, they might set up a 529 plan and contribute post tax dollars into this plan and then they name a beneficiary for that plan. So a child typically or somebody within the family that you're going to help them save for college. And to date, 529 plans have been able to be used for college, graduate and professional Degrees, programs of Title IV accredited schools, and then some new expansions that have taken place in more recent years. Registered apprenticeships and up to $10,000 per year in K12 tuition for certain private schools at the K12 level, as well as certain student loan repayment plans. But the one big gap in that has been the ability to pay for credentialing programs or workforce development training programs, things like the tuition, the fees, any required books or equipment. That stuff hasn't been a qualified expense for these plans to date. And so that's what the Freedom to Invest in Tomorrow's Workforce act does, is adds to the existing 529 plan that has been traditionally focused on college savings, the ability to use that for these credentialing or workforce development programs that would really transition college savings plans into career savings plans.
Jason Altmire [00:06:40]:
And there's been so much talk in recent years about workforce development, about the need to not push everybody into the four year path, that it's better for society and it gives individuals more opportunity to achieve, to get out in the workforce and achieve their desired career and chosen field of study. So this seems to be a no brainer to me and I'm glad folks in Congress have determined that this is something that they want to move forward. What is the status of the legislation? Who has authored it and where is it in the pipeline right now?
Kyle Hayes [00:07:18]:
Yeah, so this is a bill that's been introduced in the last two Congresses and it was just recently reintroduced in the current Congress. It's a bipartisan bill, which is great. There's not many issues like that in Washington these days. But on the House side, the bill's led by Congressman Rob Whitman, a Republican for from Virginia, and Congressman Steve Horsford, a Democrat from Nevada. And on the Senate side, the bill's led by Senator Amy Klobuchar, a Democrat from Minnesota, and Roger Marshall, a Republican from Kansas. On the House side, the bill is growing its support. We got up to 150 co sponsors in the last Congress. Since this bill was introduced in February, we're already up to 120 CO sponsors again.
Kyle Hayes [00:07:58]:
And I think really critically for this bill and we'll probably talk a little bit about this here in a second. But tax policy is going to be a huge issue in Washington this year. And this bill, because it touches the section 529 of the Tax code, this is a tax bill. So it has a dozen Ways and Means Republicans on it and five Ways and Means Democrats on it. And this was a bill that got out of the Ways and Means Committee in the last Congress. So that's one of the pieces of information where we're really confident that this bill is important to members of Congress, particularly on the tax tax writing committees, because of the support you see there. And that's why we think it's well positioned to move towards being signed into law this year.
Jason Altmire [00:08:41]:
Talk more about that. Because when you say it's been introduced in the past, hasn't made it through the finish line, you know, in fact hasn't made it that far along even in the process. And what are the dynamics now that are different? That gives you more optimism that this time it could move. And that, of course, is the discussion on the tax bill, the larger tax bill with the Trump tax cuts expiring. But talk a little bit more about why that dynamic gives you more optimism that this can be the year where the 529 plan bill can go through.
Kyle Hayes [00:09:14]:
Yeah, there's a few pieces that are part of that. One is that there is just definitely going to be some tax bill that moves this year. In 2017, the Republican Congress passed the Tax Cuts and jobs act of 2017, and many of those provisions in that bill were set to expire this year. So that creates basically a cliff at the end of 2025 where if lawmakers in Congress don't do something, many of the tax policies put in place in 2017 will be done after this year. Now, of course, that's not likely to happen. We're very likely to see some sort of bill move through the process. And Republicans are already going through the initial stages of what's known as the reconciliation process, which allows them to pass legislation on a party line vote. Because we know a big tax bill is very likely to move this year.
Kyle Hayes [00:10:04]:
And because we know that this bill has the support of a critical number of lawmakers on the Ways and Means Committee, particularly among Republicans, we're confident that this bill is one that can make it into the final tax package this year. So given that necessity to act on tax this year, that's really why we think this bill is well positioned to move.
Jason Altmire [00:10:25]:
What is the argument against this idea? I personally cannot think of any argument against why this bill should not pass. But you're up there on Capitol Hill walking around talking about it. Are there people who are pushing back on the idea?
Kyle Hayes [00:10:41]:
Yeah, I would say we've started to see any opposition to this bill really diminish this time around. I think in part because this doesn't impact what 529s were doing before. It only adds to what 529s can do by including this certification and workforce training piece as a part of it. Some of the previous Criticism has been that 529 plans are something that are really only available to wealthy people, that they could potentially be abused because of the way that they work. But that's not really something that's been borne out as it relates to this piece of expanding the bill. If you're somebody who aspires to save for your child's education, but you've got a lower to middle income job where saving for the future for things like that is really challenging for you to date, a 529 plan probably wouldn't have been super attractive to you because if you look at that as only a vehicle for saving for traditional four year college and you see how the cost of traditional four year college has just exploded dramatically in recent years, you might say, well, saving for that kind of expense really is sort of out of reach for me. But if you expand what 529s can be used for for these more affordable training programs, then you don't have to put away tens of thousands of dollars to be able to, to use this or to set this up to be used by your child. And so we think that these expanding it in this way actually allows 529s to be more accessible to people across the income spectrum because it's just a smaller investment, a smaller bit of savings on the front end that can set your child up or whoever the beneficiary is up to be able to afford the kinds of training that actually will help you succeed in today's labor force.
Jason Altmire [00:12:28]:
And I will say our association, Career Education Colleges and Universities cq, we have endorsed this bill and we're working alongside of you to make sure that it gets a fair hearing and is able to pass hopefully as part of the tax bill that will certainly pass by the end of the year. Has there been a cost estimate or a budgetary score associated with this and what do you think that is going to mean for the process?
Kyle Hayes [00:12:57]:
Yeah, this is actually one of my favorite little tidbits about this bill. And I call it a little tidbit because the cost on this really stands in stark contrast to a lot of the other challenges that Congress is going to face when they determine the costs of various pieces of their tax bill. This bill, as scored by the Joint Committee on Taxation in Congress is only estimated to cost the federal government 85 million over 10 years. That's 85 million with an M, not a B. The Thing that's important about that is when Congress is looking to make the numbers work for their tax bill, they're going to be looking for ways that they can either increase revenues or decrease spending in the federal government. And this is such a small cost that we're confident that this bill is going to be included, regardless of concerns about the cost of the broader bill, given that it has a positive impact and it comes at such a small cost to the federal government that I'm.
Jason Altmire [00:13:54]:
Sure the case can be made. It doesn't score budgetarily, but the case can be made that you're actually saving money because you're getting people into employment and jobs and contributing to society and paying taxes when they otherwise may not have that opportunity to do so. So I'm sure there's a case to be made there even though that doesn't score. So what would you expect the timing of this to be with regard to when would it pass and be enacted and then when would it actually take effect? When parents or students can use it.
Kyle Hayes [00:14:29]:
So as of now, it appears that at least the goal among leading Republicans who are leading the reconciliation debate is to try to have a tax bill done by early to mid summer, with the House potentially moving on a bill by Memorial Day and setting up the Senate to finish this process sometimes in the summertime. Now, the one caveat I'll add to that is that is a pretty ambitious timeline given the scope of the legislative package that Congress is considering. They are basically jamming all of the Republicans priorities for this year into one what President Trump has called one big beautiful bill. But it's their priorities on tax policy, their priorities on energy policy, military spending, border policy, basically anything that Republicans want to get done on Capitol Hill this year, they're initially at least looking at this bill as the best vehicle for doing that. And I think that means that this debate could get a little unwieldy. The timeline could slip. I wouldn't be surprised to see this continue to be an issue throughout the year. But once passed into law, I would think benefits of this could be seen pretty quickly, probably in the next tax year, once this is debate over the broader tax policy itself is completed.
Jason Altmire [00:15:47]:
You talked earlier to move on to the other tax issue that is very important to your organization. ASAE is the tax on nonprofits. So that's something that has been discussed and it's a really big issue that touches people and associations and organizations all over the country. So talk a little bit about what that means.
Kyle Hayes [00:16:10]:
Yeah. So for any association or professional society Any nonprofit that's sort of listening to this discussion, you're probably doing a lot of these kinds of activities in workforce development or certification. And so we know that you guys make a tremendous impact on helping people find new careers, switch careers mid cycle, things like that. And we are working to tell the story of what your organizations do on Capitol Hill in the context of tax reform through a coalition we started called the Community Impact Coalition. The concern here really is that as members of Congress are looking for ways to extend the TCJA tax policies, they will look to the nonprofit sector to help pay for that extension, to use the sector as an offset, primarily by applying the current corporate rate of 21% to the net revenue that any association has, which is currently any nonprofit organization, that revenue is currently tax exempt under tax law. This would be used as a way to help pay to extend those tax policies. We've got over 100 organizations that are a part of that coalition educating lawmakers on Capitol Hill about the impact of the nonprofit sector, about what many of your organizations are already doing every day. And so I would just ask folks, if that's an issue that's important to you, you can reach out to me directly.
Kyle Hayes [00:17:36]:
You can look at our website, CI Coalition to learn more about what's going on with tax reform and how associations can tell their story on Capitol Hill.
Jason Altmire [00:17:47]:
What would that tax look like? You know, as you said right now, these are tax exempt organizations. So when you're talking about taxing them, what's the level of taxation that's being considered?
Kyle Hayes [00:17:59]:
So the idea that's been proposed by some, you know, outside experts who are advocating for this tax increase is to apply the 21% corporate tax rate to all, to the net revenue for all non donation revenue nonprofits. So, you know, if your organization has a positive net revenue, you could look at that figure maybe on your 990, and you could say, well, 21% of that would be subject to tax if it's non donation revenue, which is a significant sum for, especially for larger associations. But, but for smaller associations like the one that I was a part of, that have more limited budgets, and that net revenue is not very much, there's not a lot of margin between being able to put that money to tax burden and put it to some critical activities like a conference or a professional development thing for your members, especially for small associations, the concern is that that burden would be so big that a big chunk of your activities would be put at risk when that funding is diverted to tax burden rather than your mission.
Jason Altmire [00:19:06]:
This is very different than the way nonprofits have operated for decades. What are the advocates of that potential policy of taxation? What are they arguing to make the case of why this is something that should be done?
Kyle Hayes [00:19:22]:
They're arguing, I think primarily in a couple of different ways. One is that there has been some concern in particular from members of the Ways and Means Committee about the political activities that have been undertaken by some nonprofits. You know, they've talked about this publicly. They asked the IRS to revoke the tax status of a Georgia based nonprofit that was found to be improperly supporting a candidate for governor's campaign in Georgia in a recent cycle. So that is some of the concern. Some of the other flavor of concern is that some of these nonprofit organizations have grown to such a degree that they are providing services that are competitive to for profit organizations that are taxed. And so these nonprofits are believed to get an unfair advantage by not being subject to the same kinds of taxes that for profits are. But that really doesn't capture the story for the entire sector because there are so many associations, so many of which have these small budgets that are not actually providing services that are competitive to large for profit organizations.
Kyle Hayes [00:20:31]:
And then the one key difference that I think is really missed in this debate is that associations, other nonprofits like that, when they have excess revenue in their net revenue, they reinvest that money into their mission. They don't give that out to shareholders or owners. All of that money is reinvested into the communities that they, they serve as a part of their association. And so that's why it's important for that funding to be able to be available for the mission and not for federal tax burden.
Jason Altmire [00:21:01]:
I know your members at ASAE know how to get in touch with you and find more information. But if somebody out there listening to this podcast wants to learn more about either of these two issues or ASAE and your work, how would they do it?
Kyle Hayes [00:21:15]:
Sure. So you can find us for these coalitions in two places. The coalition in support of the Freedom to Invest in Tomorrow's Workforce act, that's a coalition called the Tomorrow's Workforce Coalition. That's an over 900 member organization, strong group in support of that bill. So you can check us out at Tomorrow's Workforce Coalition. The other one is the community impact coalition, cicoalition.org where you can find out about the activity that we're doing on tax reform. And then to find more about me, you can find me on ASAE's website, asaecenter.org or you can reach out to me over email. Kayhayes H A Y E S at A S A Happy to connect and get anybody involved in our work to help protect associations and advance their interests on the Hill.
Jason Altmire [00:22:03]:
This year our guest has been Kyle Hayes. He is the Senior Director of Public Policy for ASAE. Kyle, thank you for being with us.
Kyle Hayes [00:22:12]:
Thank you so much for having me.
Jason Altmire [00:22:21]:
Thanks for joining me for this episode of the Career Education Report. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at career.org and follow us on Twitter @CECUED. That's C-E-C-U-E-D. Thank you for listening.