“Republicans’ “big, beautiful bill” includes a gift to millions of families: $1,000 in an investment account for every eligible newborn.
The new savings vehicles, akin to Individual Retirement Accounts, are designated for children who are U.S. citizens born from 2025 through 2028. In addition to the one-time government contribution, parents and others can chip in as much as $5,000 a year to the accounts, which beneficiaries can access at 18, with some constraints.
The seed money is a boon for recipients and will grow tax-deferred. Financial planners say parents and guardians might do better putting their money into existing investment vehicles such as a 529 plan, a savings plan designed to cover college expenses. But 529s are limited to education, while backers say the new accounts can help their recipients beyond college.
Republican lawmakers call the accounts “Trump accounts,” though the Senate’s plan to officially name them after the president did not make it to the final version of the legislation, which was signed Friday. They deliver on an idea that both Democrats and Republicans have floated for years: to invest money for all children at birth.
Withdrawals from a 529 are not subject to state or federal taxes as long as the funds go toward qualified education expenses – a feature the new investment accounts don’t share. And in the new accounts, parents’ deposits don’t qualify for a tax deduction, notes Greg Leiserson, a senior fellow at the Tax Law Center at New York University. “You have this very slight or minimal-to-nonexistent tax benefit,” he said. “What is the point here?”
Financial adviser Amy Spalding of Chapel Hill, North Carolina, said she will continue to steer her clients to 529s. “It’s better from a tax standpoint,” Spalding said. “And there are more investment options. And then there’s a higher contribution limit.” (For 2025, a single person can deposit as much as $19,000 a year into a beneficiary’s 529, while married couples can contribute as much $38,000.)
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withdrawals will be taxed at typical income rates, not at the capital gains rate of a taxable brokerage account. “For most people, this is going to be worse than what they could do in a taxable account,” he said.
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The law requires the new investment accounts to track a U.S. stock index
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“If you’re saying, ‘Okay, I’m going to start school in the fall’ – if the market falls over the summer, the planning you were doing about how you were going to pay for college is totally messed up, because the money you thought would be there, isn’t.”
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account holders cannot touch the funds until they turn 18. After that, the rules are the same as those of an individual retirement account – withdrawals are taxed like income, plus an additional 10 percent tax penalty on any withdrawals before age 59½ except for certain qualified uses.
Those uses include paying for college, supporting themselves if they become disabled, or recovering from domestic abuse or a natural disaster. Beneficiaries also can withdraw as much as $10,000 to buy their first home, and up to $5,000 when they have a new baby themselves.
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Even one of the Trump accounts’ biggest proponents in Congress, Rep. Blake Moore (R-Utah), said in an interview that for many parents, the new account design offers more benefits for retirement than for college expenses.”
“Texas will require all public school classrooms to display the Ten Commandments under a new law that will make the state the nation’s largest to attempt to impose such a mandate.
Gov. Greg Abbott announced Saturday that he signed the bill, which is expected to draw a legal challenge from critics who consider it an unconstitutional violation of the separation of church and state.”
“Just how mad is Beijing about President Donald Trump’s decision to revoke student visas for Chinese nationals? Not as mad as it says, and not as mad as one might expect. Publicly, China’s leadership will likely complain that Trump’s action is yet another attempt to thwart the country’s rise. But in reality, Beijing would probably just as soon keep its smartest kids at home.”
“Chronic absenteeism—often defined as when a student is absent for more than 10 percent of the school year—skyrocketed during the pandemic. According to AEI’s absenteeism tracker, by 2022, national chronic absenteeism increased by 89 percent when compared to three years prior. While absenteeism has declined from its 2022 peak in most states that report such data, 2024 figures show it remains higher than pre-pandemic levels. Absolute rates of absenteeism varied broadly state by state. In Alabama, students had the lowest rate, peaking at 18 percent in 2022 and falling to 15 percent in 2024. By contrast, nearly half of all students in Washington, D.C., were chronically absent in 2022, dropping to a still-staggering 40 percent in 2024.”
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“According to Polikoff’s research, low-income students in particular are facing persistent increases in absenteeism when compared to pre-pandemic numbers.”
The SAT helps colleges determine who will succeed at college. It helps show which students from disadvantaged schools have the most potential to shine. The wealthy can better game other admissions standards than they can the SAT.
Trump administration is forcing students to start paying their loans again. The systems in place to help people who can’t afford it are broken due to DOGE cuts. The lack of staff also makes it difficult to fix a mistake, like when people receive a loan bill higher than it should be.
“Bots create AI-generated student profiles, apply for enrollment, and submit minimal online coursework—often AI-generated—to stay enrolled long enough to receive federal and state aid disbursements intended for low-income students. The scammers are known as “Pell runners,” who disappear after collecting the $7,400 federal grant.”
“In the new school year, thousands of Oklahoma students will be required to learn about 2020 election fraud conspiracy theories as part of a new curriculum developed by the state’s controversial superintendent, Ryan Walters. Walters, who has come under fire in recent months for an effort to require Oklahoma classrooms to stock Bibles and display the Ten Commandments, has said that the addition “empowers students to investigate and understand the electoral process.”
Under the state’s new curriculum, high school students will be taught to “identify discrepancies in 2020 elections results by looking at graphs and other information, including the sudden halting of ballot-counting in select cities in key battleground states, the security risks of mail-in balloting, sudden batch dumps, an unforeseen record number of voters, and the unprecedented contradiction of ‘bellwether county’ trends.”
While it’s not necessarily unreasonable to want students to learn about the dispute over the 2020 election, the standards’ framing of the controversy (which turned up no evidence of election interference) and Walters’ comments about it make it clear that teachers are meant to shed doubt on the veracity of the election.”
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“The standards also contain passages directing teachers to ensure that students can “identify the source of the COVID-19 pandemic from a Chinese lab,” and “explain the effects of the Trump tax cuts, child tax credit, border enforcement efforts.””
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“The curriculum change is just one of a battery of recent attempts to inject partisan politics into public school curricula. While blue states have faced criticism from the right for injecting critical race theory into the classroom, many red states have engaged in far more galling efforts to politicize classroom instruction.”
“Basically all major colleges and universities are tax-exempt organizations, and the government revoking that status over policy disagreements would be unprecedented. The U.S. tax code also grants exemptions to a wide swath of organizations, including charities, religious institutions — and even some political organizations.
But Republicans have taken aim at the Ivy League through the tax code in the past.
Congress imposed a 1.4 percent tax on high-dollar university endowments, like Harvard’s, in 2017 and Republicans may expand the levy in the tax package they are currently assembling.
Trump’s threats follow his administration pulling over $2.2 billion of Harvard’s federal funding in response to the university announcing it would not comply with a list of demands to curb what the White House views as antisemitism on campus.
Educational institutions can lose their tax-exempt status if found to be participating in activities related to political campaigning for or against candidates, or substantial amounts of lobbying by the Internal Revenue Service. There is no public evidence of Harvard violating IRS rules.”