Nebraska lawmakers are considering a significant change to the state's educational savings plan that could expand financial options for families. During a recent Revenue Committee meeting, discussions centered around LB 131, a bill aimed at aligning Nebraska's 529 educational savings plan with federal law, allowing families to use these funds for K-12 tuition expenses.

Currently, Nebraska's 529 plan, known as the Nebraska Educational Savings Trust (NEST), only permits tax-free withdrawals for higher education expenses. LB 131 proposes to extend this benefit to include up to $10,000 per year for tuition at private elementary and secondary schools. Proponents argue that this change would empower families to choose educational options that best fit their needs, thereby enhancing educational freedom and financial flexibility.

Supporters of the bill, including Deputy State Treasurer Rachel Beyer, highlighted the growing trend of families saving for education through NEST accounts, noting that Nebraska has one of the highest participation rates in the country. They emphasized that the bill would not only conform state law to federal provisions but also help retain Nebraska families who might otherwise invest in out-of-state plans that offer broader benefits.

However, the proposal has faced opposition from various education advocates, including the Nebraska State Education Association. Critics argue that LB 131 could divert funds from public schools and primarily benefit wealthier families who can afford private education. They also raised concerns about the potential long-term fiscal impact on the state's budget, especially given existing budget shortfalls.

The committee heard testimony from multiple stakeholders, including representatives from non-public schools and educational organizations, who expressed support for the bill as a means to support families making significant investments in their children's education. They pointed out that many families already contribute to both public education through taxes and private tuition, and LB 131 would provide them with additional financial support.

As the committee deliberates, the implications of LB 131 could reshape how Nebraska families approach educational funding, potentially increasing the number of families utilizing the NEST program for K-12 expenses. The bill's future remains uncertain as lawmakers weigh the benefits of expanded educational choice against concerns about its impact on public education funding.