Department of the Treasury

Education Savings Bonds As They Were Meant To Be.

Make U.S. Savings Bonds simple and easy to understand to help people save and pay for a college education. Remove limitations affecting use of bonds to pay for college tuition and books so anyone who pays a child's college costs can receive the federal tax benefit. In other words, remove the income limitations, remove the age 24 restriction when purchasing that is used to determine eligibility, remove the restriction of naming a child on the bond as a coowner that restricts eligibility, and eliminate how owning U.S. savings bonds affects the parents' and children's financial aid and scholarship eligibility. The idea here is to keep it simple and encourage relatives (not just parents) to help pay for kids' education, and make it easy to understand. Then create public awareness of the Education Savings Bonds Program like it was intended to be promoted when the cumbersome program took effect in 1990.


If more people are encouraged to save for college with a Treasury security they can count on, the government will need fewer funds to lend out to parents and students, and the overall default level will drop proportionally.


This change should lead to a lower cost to finance the public debt due to the nature of savings bonds in general (and especially for electronic bonds purchased through,) which will offset the loss of federal income tax revenue. But more importantly, the country is better off if more people can afford to send their children, grandchildren, nieces, and nephews to college when the kids are ready to go. And that is a major step that will help restore America to its former lead position in the world for post-secondary education as envisioned in President Obama's "America's Graduation Initiative."


It is not unreasonable that the net effect on the Treasury will yield millions in savings annually after a few years, depending on simple it is to understand and how well the public is informed.



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Idea No. 14428