Bill Allows Welfare Recipients To Save For College

Legislation that passed both the state Senate and Assembly would allow those on public assistance to remain on public assistance while having money set aside in a 529 college savings account.

According to the legislative justification filed along with the legislation, S.1089/A.5016, New Yorkers who have more than $2,000 in assets are not eligible to receive public assistance.

State law already exempts some assets from the calculation for public assistance, including $2,000 cash or $3,000 for households with anyone over the age of 60; $4,600 in a separate bank account to purchase a first vehicle or a replacement vehicle so that the welfare recipient can seek or obtain employment; $1,400 in a separate bank account to pay tuition to a two- or four-year college; the person’s home; a vehicle; a burial plot; funeral agreements up to $1,500 in equity value per household member; real property the household is trying to sell; and money in an individual development account which helps families save money and work towards greater self-sufficiency.

Assemblywoman Michelle Titus, D-Rockaway, cited in her legislative justification for the bill a study showing 9% of students from low-income families obtain a bachelor’s degree compared with 54% of students from wealthier families.

She said New York’s low-income families need support and assistance so that they may develop college savings for their children.

“As you know Assemblyman, this is our safety net here in New York,” Titus said. “So this person could very well have worked their whole life, been saving up their money and now that they’ve come upon hard times. We’re not looking to totally rip them down and destroy they, rather just help them and assist them through these hard times. And of course as you know according to the federal law there are penalties for withdrawing money from this (529) fund.”

Assemblyman Andrew Goodell, R-Jamestown, noted that it’s possible for a 529 savings fund, if started early enough, to have between $350,000 and $375,000 by the time a student graduates from high school. Goodell questioned having such savings available while receiving public assistance benefits as well as the idea that such an exemption is needed in the state’s Social Services Law if the state provides free tuition.

“My question is still the same,” Goodell said. “If tuition is now free in New York why should we allow someone to collect money from the taxpayers under social services? Why should we allow them to set aside hundreds of thousands of dollars in a tuition account if tuition is free?”

Titus responded that students don’t have to attend college in New York state.

“You said tuition is free in this state,” Titus responded. “You could go out of state for school. You’re not limited to having your education here in New York state.”

Rep. Charles Barron, D-Brooklyn, later responded that tuition is not free in New York state. While Gov. Andrew Cuomo and members of the state Legislature deemed the Excelsior Scholarship as free tuition for New York residents, Barron said the Legislature has raised tuition roughly $200 a year in each of the last five years.

“You don’t raise tuition if there is none,” Barron said. “We don’t live in a tuition free university. The university has tuition and you can get scholarships to pay for it. … There are also non-tuition costs that is even greater than the tuition. This is sorely needed. We should always support programs that are trying to advance our people who are on these programs, who are trying to get free, who are trying to get economically advanced. We should not be against programs that do that.”

Assemblyman Mark Walczyk, R-Watertown, spoke on the Assembly floor to explain his vote against the legislation by saying it is conceivable that a family with four children could be on public assistance for the entire time their children are in school and amass close to a million dollars in 529 savings accounts. If the children then don’t go to college, the family could cash out the 529 savings accounts with a 10 percent penalty and receive close to the entire million dollars.

“That’s the most egregious piece of this legislation to me,” Walczyk said. “The intent is to see children go to college. If they don’t go to college I would encourage a future sponsor of legislation like this to find another alternative to just translating that to cash. I think that is offensive to taxpayers and could actually only promote generational poverty in New York state.”

Goodell ended his opposition by noting the costs counties pay each year as their share of social services costs and the role the state plays in expanding such programs rather than curtailing them.

“In New York, you can get free tuition,” Goodell said. “So if we provide free tuition to any New York resident at any New York public college, I don’t understand why we should allow an individual to collect public assistance while having up to $300,000 in a savings account for expenses their child won’t need if that child stays in New York and goes to a New York college. I think it’s time to start focusing on what we can do to reduce the massive property tax burden that our residents are facing that are driven by programs that we don’t adjust even after we now offer free tuition.”

The legislation passed 97-49 in the Assembly. No Republican voted for the legislation while seven of the 104 Democrats who voted were against. Five Republicans crossed party lines in the state Senate while no Democrat in the Senate voted against the proposal.

“Very briefly, my colleagues, I don’t know if we’re reading the same bill,” said Assemblyman Andrew Hevesi, D-Forest Hills. “Very simply, the point of this bill is to get kids to go to college so they get off of public assistance. It saves you money, it helps the people. This is a great bill. I don’t understand some of the arguments. Maybe we’re reading something differently.”


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