Other developments are occurring in Washington that could ultimately affect 529 sales, although professionals had varying views on their chances of threading their way through a Democratic Congress.

One proposal included in the 2008 fiscal year budget message by President George W. Bush would exempt 529 savings plan assets from all financial aid calculations.

“The president’s budget proposal to shelter all 529s from financial aid is the next major step in the evolution of 529s–and potentially another in a recent run of important milestones making 529s more accessible to families saving for college,” commented Bruce Harrington, director, 529 plans, MFS Investment Management.

Although such a plan could hurt 529 account sales, Raymond Loewe sees little chance of it passing. He also gave long odds on passage of Bush’s idea for lifetime savings accounts, which would allow the taxpayer to save up to $2,000 annually. Funds in the proposed LSA could be withdrawn at any time and for any reason, with all earnings excluded from federal income tax.

Margaret A. Munro, too, doesn’t think the LSA is going anywhere.

“He’s been trying to get this passed for past 6 years,” she argues. “He wasn’t able to get it through a Republican Congress, and I don’t see a Democratic Congress going with it, either.”

–Trevor Thomas