Tax-Preferred College Savings Plans: An Introduction to Coverdells

Margot L. Crandall-Hollick
Analyst in Public Finance

In the face of the rising cost of higher education, families may consider a variety of ways to finance their children’s college expenses. In order to make higher education more affordable, Congress has enacted legislation that provides favorable tax treatment for college savings. Among their options, families may choose to use a Coverdell Education Savings Account (ESA) to save for their child’s elementary, secondary, or college education expenses. This report provides an overview of the mechanics of Coverdells, including a summary of the key parameters of Coverdells that are scheduled to expire at the end of 2012. The report also examines the specific tax advantages of these plans. For an overview of all tax benefits for higher education, see CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary Effects, by Margot L. Crandall-Hollick.


Date of Report: November 5, 2012
Number of Pages: 13
Order Number: R42809
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Affirmative Action and Diversity in Public Education: Legal Developments

Jody Feder
Legislative Attorney

More than three decades after the Supreme Court ruling in Regents of the University of California v. Bakke, the diversity rationale for affirmative action in public education remains a topic of political and legal controversy. Many colleges and universities have implemented affirmative action policies not only to remedy past discrimination, but also to achieve a racially and ethnically diverse student body or faculty. Justice Powell, in his opinion for the Bakke Court, stated that the attainment of a diverse student body is “a constitutionally permissible goal for an institution of higher education,” noting that “[t]he atmosphere of ‘speculation, experiment, and creation’ so essential to the quality of higher education is widely believed to be promoted by a diverse student body.” In subsequent years, however, federal courts began to question the Powell rationale, unsettling expectations about whether diversity-based affirmative action in educational admissions and faculty hiring is constitutional under the equal protection clause of the Fourteenth Amendment.

After a series of conflicting lower court rulings were issued regarding the use of race to promote a diverse student body, the Supreme Court agreed to review the race-conscious admissions policies used by the undergraduate and law school admissions programs at the University of Michigan. In Grutter v. Bollinger, a 5 to 4 majority of the Justices held that the University Law School had a “compelling” interest in the “educational benefits that flow from a diverse student body,” which justified its race-based efforts to assemble a “critical mass” of “underrepresented” minority students. But in the companion decision, Gratz v. Bollinger, six Justices decided that the University’s policy of awarding “racial bonus points” to minority applicants was not “narrowly tailored” enough to pass constitutional scrutiny. The decisions resolved, for the time being, the doctrinal muddle left in Bakke’s wake. And because the Court’s constitutional holdings translate to the private sector under the federal civil rights laws, nonpublic schools, colleges, and universities are likewise affected.

However, the Grutter and Gratz decisions did not address whether diversity is a permissible goal in the elementary and secondary educational setting. To resolve this question, the Supreme Court agreed to review two cases that involved the use of race to maintain racially diverse public schools and to avoid racial segregation. In a consolidated 2007 ruling in Parents Involved in Community Schools v. Seattle School District No. 1, the Court struck down the Seattle and Louisville school plans at issue, holding that they violated the equal protection guarantee of the Fourteenth Amendment.

Meanwhile, the Court is poised to revisit the issue of affirmative action in higher education during the current 2012-2013 term. The case, Fisher v. University of Texas, involves an equal protection challenge to the undergraduate admissions plan at the University of Texas at Austin, which, in a stated effort to increase diversity, considers race as a factor when evaluating applicants to the school.


Date of Report: October 18, 2012
Number of Pages: 30
Order Number: RL30410
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Assessment in Elementary and Secondary Education: A Primer

Rebecca R. Skinner
Specialist in Education Policy

In recent years, federal education legislation has placed an increased emphasis on assessment in schools. Perhaps most notably, Title I-A of the Elementary and Secondary Education Act (ESEA), as reauthorized by the No Child Left Behind Act (NCLB), requires states to test all students annually in grades 3 through 8 and once in high school in the areas of reading and mathematics. These assessments are used as key indicators in an accountability system that determines whether schools are making progress with respect to student achievement. To receive Title I funding, states must also participate in the National Assessment of Educational Progress (NAEP), a standards-based national test given at grades 4 and 8. The Individuals with Disabilities Education Act (IDEA) requires states to use assessments to identify students with disabilities and track their progress according to individualized learning goals. In addition to assessments required by federal law, elementary and secondary school students generally participate in many other assessments, which range from small-scale classroom assessments to high-stakes exit exams.

This report provides a framework for understanding various types of assessments that are administered in elementary and secondary schools. It broadly discusses various purposes of educational assessment and describes comprehensive assessment systems. Common assessment measures currently used in education are described, including state assessments, NAEP, and state exit exams. The report also provides a description and analysis of technical considerations in assessments, including validity, reliability, and fairness, and discusses how to use these technical considerations to draw appropriate conclusions based on assessment results. Finally, this report provides a brief analysis of the use of assessments in accountability systems, including implications for curriculum, students, and testing.


Date of Report: October 12, 2012
Number of Pages: 40
Order Number: R40514
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GI Bills Enacted Prior to 2008 and Related Veterans’ Educational Assistance Programs: A Primer

Cassandria Dortch
Analyst in Education Policy

The U.S. Department of Veterans Affairs (VA), previously named the Veterans Administration, has been providing veterans educational assistance (GI Bill) benefits since 1944. The benefits have been intended, at various times, to compensate for compulsory service, encourage voluntary service, avoid unemployment, provide equitable benefits to all who served, and promote military retention. In general, the benefits provide grant aid to eligible individuals enrolled in approved educational and training programs. Since three of the GI Bills have overlapping eligibility requirements and the United States is expected to wind down involvement in active conflicts, Congress may consider phasing out one or more of the overlapping programs.

This report describes the GI Bills enacted prior to 2008. Although participation in the programs has ended or is declining, the programs’ evolution and provisions inform current policy. The Post- 9/11 GI Bill (Title 38 U.S.C., Chapter 33), enacted in 2008, is described along with potential program issues in CRS Report R42755, The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill): Primer and Issues, by Cassandria Dortch.

This report provides a description of the eligibility requirements, eligible programs of education, benefit availability, and benefits. The report also provides some summary statistics, comparisons between the programs (see Table 2), and brief discussions of related programs. Individuals currently participate in five GI Bills enacted prior to 2008:

• The most popular program prior to the Post-9/11 GI Bill was the Montgomery GI Bill-Active Duty (MGIB-AD), which provides a monthly allowance primarily to veterans and servicemembers who enter active duty after June 30, 1985. 
• The Montgomery GI Bill-Selected Reserve (MGIB-SR) provides a lower monthly allowance than the MGIB-AD to reservists who enlist, re-enlist, or extend an enlistment after June 30, 1985. 
• The Reserves Educational Assistance Program (REAP) provides a monthly allowance that is higher than the MGIB-SR but lower than the MGIB-AD to reservists with active duty service. 
• The program with the fewest individuals receiving benefits is the Post-Vietnam Era Veterans’ Educational Assistance Program (VEAP), which provides a monthly allowance to veterans who first entered active duty service on or after January 1, 1977, and before July 1, 1985. 
• The dependents of individuals with military service may be eligible for the Survivors’ and Dependents’ Educational Assistance (DEA) program, which provides benefits to the spouse and children of servicemembers who, as a result of service, are seriously disabled, die, or are detained. 

Other educational support is available to veterans using these benefits. Participants may also request academic and vocational counseling before and while using their GI Bill benefits. Participants on a growing number of pilot campuses have access to the VetSuccess on Campus program, which provides on campus counseling and referral services. In addition to counseling support, some participants may participate in the Veterans Work Study Program to receive additional financial assistance in exchange for work while attending school.


Date of Report: October 22, 2012
Number of Pages: 54
Order Number: R42785
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The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill): Primer and Issues

Cassandria Dortch
Analyst in Education Policy

The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill)—enacted as Title V of the Supplemental Appropriations Act, 2008 (P.L. 110-252) on June 30, 2008—is the newest GI Bill and went into effect on August 1, 2009. There were four main drivers for the Post-9/11 GI Bill: (1) providing parity of benefits for reservists and members of the regular Armed Forces, (2) ensuring comprehensive educational benefits, (3) meeting military recruiting goals, and (4) improving military retention through transferability of benefits. By FY2010, the program had the largest numbers of participants and the highest total obligations compared to the other GI Bills.

The Post-9/11 GI Bill provides benefits to veterans and servicemembers who serve on active duty after September 10, 2001. Participants may be eligible for payments to cover tuition and fees, housing, books and supplies, tutorial and relocation assistance, and testing and certification fees. Individuals who serve on active duty for 36 months after September 10, 2001, may receive a tuition and fees benefit of up to the amount of in-state tuition and fees charged when enrolled in public institutions of higher learning, or up to $18,077.50 when enrolled in private institutions of higher learning in academic year 2012-2013. Benefit payments vary depending on the participant’s active duty status, length of qualifying active duty, rate of pursuit, and program of education.

There are two mechanisms by which dependents of individuals with military service may be eligible for Post-9/11 GI Bill benefits. Transferred Post-9/11 GI Bill benefits may be available to the dependents of servicemembers who stay in the military for at least 10 years. Also, the Post- 9/11 GI Bill Marine Gunnery Sergeant John David Fry Scholarship Program may be available to the children of servicemembers who die while serving on active duty in the line of duty.

The Post-9/11 Veterans Educational Assistance Improvements Act of 2010 (P.L. 111-377) made several amendments to eligibility and benefits under the Post-9/11 GI Bill. The Restoring GI Bill Fairness Act of 2011 (P.L. 112-26) temporarily reversed a P.L. 111-377 amendment to the tuition and fees benefit for some individuals. The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012 (P.L. 112-154) requires the Department of Defense (DOD) and Department of Veterans Affairs (VA) to provide annual reports to Congress on the Post-9/11 GI Bill and the Survivors’ and Dependents’ Educational Assistance program (DEA).

Congress, administrators, and participants have raised several issues recently. In light of the amount of federal funds devoted to these benefits, an average of $13,871 per participant and a total of $7.7 billion in FY2011, some concerns have been raised regarding the quality of the programs of education and the deceptive recruiting techniques of some institutions serving Post- 9/11 GI Bill participants. The President issued Executive Order 13607, Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and Other Family Members, on April 27, 2012, to provide information, support, and protections to servicemembers, veterans, and their family members who use federal military and veterans educational assistance benefits. Issues have also been raised regarding benefit overpayments, benefit levels, transferability, and benefit uses.

This report provides a description of the eligibility requirements, benefit availability, benefit payments, participation, and obligations of the Post-9/11 GI Bill. The report also describes a few issues that may be addressed by Congress.


Date of Report: September 21, 2012
Number of Pages: 34
Order Number: R42755
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