American families accumulated more college debt during the first five years of the 1990s than in the previous three decades combined. In response to the rising cost of a college education, Congress increased the attractiveness of state-sponsored college tuition savings and prepayment plans by allowing parents to defer federal income tax on all interest earned until the student enrolls in college.

• The House Ways and Means Committee's $80 billion tax-cut package would extend the same tax treatment state-sponsored plans enjoy under the current law to plans at private colleges and universities.

• Some members of Congress want to make the interest earned through all of the tuition savings and prepayment plans tax-free, thus vastly expanding their benefits to participating families and children.

• About 30 million children in families with incomes above 125 percent of the poverty level could benefit, say experts.

Some have criticized educational savings accounts as a tax break solely for the rich and upper class, with little benefit for working-class families. However, families with annual incomes of less than $35,000 purchased 62 percent of the prepaid tuition contracts sold by Pennsylvania in 1996. In Kentucky the average monthly contribution to a family's college savings account during 1995 was $43.

Source: Rea S. Hederman, "Who Would Benefit from Prepaid College Tuition Plans?" Report No. 98-07, September 25, 1998, Center for Data Analysis, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.