Bill Would Expand Tax Breaks, Savings Accounts for Students

The Senate Finance Committee is scheduled to vote Wednesday on legislation that would expand education savings accounts and provide tax breaks to student borrowers.

As part of a broad bill unveiled Monday, Committee Chairman William V. Roth would let parents contribute $2,000 annually to tax-free accounts for their children's expenses at public or private schools. However, the current $500 yearly limit on contributions would be restored after four years.

The legislation would expand eligible spending beyond college expenses to include elementary and secondary school costs such as tuition, books, and computers through 2003. Families with annual incomes greater than $160,000 would not qualify for the accounts.

Also, the legislation would eliminate the 60-month limit on deductibility of student-loan interest by low- and moderate-income borrowers and allow the Federal Home Loan banks to guarantee a maximum of $500 million in school construction bonds annually.

President Clinton vetoed a similar bill last summer. A White House spokesman said the administration will probably issue a formal position on the new Roth bill this week.