| Message to Maine: A
Helping Hand for a Life of Learning 
By Congressman
Tom Allen
Tracey Perkins,
34, has been doing accounting work since she was in high school, but she has been able to
take only a few course credits in that field from her local community college. But now she
is on a path to her dream job — the chief financial officer of the company where she
now works, Maine Oxy in Auburn. Her goal has become attainable because she and her
employer are contributing to her Lifelong Learning Account (LiLA), to the costs of the
classes she’ll need in order to acquire a BA in accounting. The program, with tax
benefits that encourage savings, is now being tested in Maine and a few other locations.
Because of LiLA’s huge potential to help others like Tracey afford continuing
education, I have introduced legislation in the House of Representatives to extend this
option for other Americans.
In our rapidly
changing world, the skills and knowledge we acquired in high school, technical schools,
college, or our first jobs can quickly become incomplete, out of date, or otherwise not in
demand. But education is expensive, and many who have entered the work-force don’t
have the resources to pay these costs. Because of their age, employment status, lighter
course load, or other reasons, they may be ineligible for federal loans, grants, or tax
breaks designed for more traditional students. Employers may be eager to help their
workers go back to school, but are unable to afford a reimbursement program.
LiLAs,
developed by the nonprofit Council for Adult Experiential Learning, are an innovative and
flexible way for people to afford the training they need to stay current, advance to more
challenging positions, or pursue new interests. My bill, H.R. 2901, would make LiLAs more
widely available through demonstration projects in up to ten states, with accounts
available for up to 200,000 workers. The entire Maine delegation has thrown its support
behind LiLAs, with Rep. Mike Michaud cosponsoring my bill and Senator Olympia Snowe
introducing a similar bill in the Senate (S.26) with Senator Susan Collins as a cosponsor.
LiLAs are
similar in concept to 401(k) retirement accounts, but the funds — contributed by
employees and matched by employers — can be used for education and training.
Contributions are encouraged by attractive tax advantages for both employees and
employers. Under my bill, middle-income Americans (individuals earning up to $55,000 a
year after taxes, or $110,000 for joint returns) will be eligible to receive a tax refund
on the first $500 they contribute to the account, and a tax deduction on savings
thereafter. Low-income participants would receive a refundable tax credit. Employers also
receive up to a $500 tax refund for their matching contributions; all distributions for
eligible expenses are excluded from the employee’s taxable income. Self-employed
persons can also reap the tax advantages accorded employees (although they cannot also
claim the tax benefits for contributions made as an employer).
Like 401(k)s,
the accounts are portable; if employees leave their jobs, they can take the funds
(including the employer match) with them to other jobs or access them during periods of
unemployment. Like Roth IRAs, LiLA can be established in a bank or, as in Maine, through a
state’s 529 education savings plan. LiLAs can be used for a broad range of expenses
related to education. These include tuition, fees, books, supplies, and if approved,
tools, equipment, information-technology devices, training and apprenticeship programs.
LiLAs fill in
gaps left by existing student financial assistance programs. Coverdell Education Savings
Accounts, for example, are available only to Americans between the ages of 18 and 30, and
the Hope Scholarship Tax Credit applies only to those who are currently attending school
at least part-time.
Employers who have been
participating in Maine’s pilot LiLA program have the foresight to understand that
their support for continuing education increases efficiency and promotes retention and
recruitment of quality workers. Maine Oxy’s Carl Paine, both an owner and an account
holder, is enthusiastic about these prospects. For workers, it is a way to move up a
career ladder or keep up with the dizzying pace of technological innovation and the sea
changes ushered in by international trade. It makes sense for government to support these
efforts, since such investments will yield greater productivity and wealth for the whole
society.
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