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How the American Families Plan Could Reshape the U.S. Educational System

This week the Biden administration plans to unveil a massive spending and tax plan aimed at transforming the U.S. economy, specifically the educational system. The “American Families Plan” calls for infusing hundreds of billions of dollars into childcare, preschool and tuition-free community college. It comes on the heels of the $1.9 trillion coronavirus relief package, which injected $125 billion into the K-12 system.

This ambitious plan aims to reduce inequities by investing in every level of the education system. It’s heavily focused on exponentially increasing federal support to high-poverty districts, updating school infrastructure, and subsidizing preschool and community college.

Should the American Families Plan become law, we’ll see the largest increase in government-funded educational time since high school became universal. The system would morph from the current 13-year standard (kindergarten – 12th grade) to a 17-year journey, starting at age three and ending after two years of community college.

Looking Outside

What’s Expected in the AFP

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Continued expansion of the child tax credit – Temporarily extended through the March stimulus bill, the child tax credit program would remain in place until 2025. The Biden administration expects this program to lift millions of children out of poverty.

Affordable childcare- Biden’s plan is expected to focus heavily on childcare subsidies and tax credits. The Washington Post reports that more than $200 billion could be prioritized to fund childcare for working families.

Universal preschool – The AFP will propose free preschool instruction for all three- and four-year-olds.

Free community college – The first two years of community college for adults and new high school graduates would be covered under Biden's plan. Job training programs outside of community colleges would also qualify.

Student loan forgiveness – At $1.7 trillion, student debt is currently higher than auto loans and credit cards. Biden has proposed canceling $10,000 in debt per student, however it’s unclear how much debt the AFP could forgive.

Picking up the Tab

The AFP could cost more than $1 trillion and would likely be funded by tax increases on high-income Americans and investors. Politico reported that proposals include “raising the top marginal tax rate back to 39.6% and taxing capital gains as ordinary income above a certain threshold.” Biden has pledged not to raise taxes on those earning below $400,000 a year.

The President is expected to give more details about the American Families Plan on April 28th when he addresses a joint session of Congress.

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