Magazine article The Catalyst

Lifelong Learning Accounts & the New Landscape for Learning

Magazine article The Catalyst

Lifelong Learning Accounts & the New Landscape for Learning

Article excerpt

Lifelong Learning Accounts (LILAS)

LiLAs are modeled on successful tuition assistance program models offered by companies to their employees around the country. The LILA accounts can be used for any education and training that would fulfill an individual's career goals. Like a 401 (k), LiLAs are designed so that they stay with employees when they change jobs - a frequent occurrence for many workers today.

The vision for LiLAs includes individual accounts available to any adult, where both employers and employees receive tax benefits for their contributions. The goal is for LiLAs to become a part of the overall employment compensation package, as health insurance and pension benefits are today.

LILA PRINCIPLES

LiLAs are based on a set of principles that have been derived from the study of various benefit programs, including Social security, Individual Retirement Accounts, 401 (k) accounts, Medical Savings Accounts, College Savings Accounts, and Individual Development Accounts.

These principles include:

Universal Eligibility: Universal eligibility is critical so that no one set of workers is stigmatized by participation in the program. More importantly, in an economy undergoing constant and rapid transformation, many more people than the very poor are at risk of skill depreciation and will need continuous renewal of their employability.

Workplace based: Virtually the entire system of benefits, for better or worse, is workplace based. This is true for healthcare, pensions, 401 (k)s, and medical savings accounts (MSAs). Since LiLAs have been designed to be consistent with other workplace-based benefits, they can take advantage of existing systems of administration rather than reinventing the wheel and, more significantly, provides a simple way for employers to contribute.

Matched Account Contributions: Matched accounts represent a commitment by all parties - individuals and employers - to make an investment in lifelong learning. A national system of LiLAs would allow for taxexempt employee contributions, with employer matches providing companies with tax credits.

Informed choice: Individual participants choose the training and education they need to meet their career goals based on a learning plan developed with the assistance of educational and career advisors.

Portability: Today's labor market is characterized by change, especially among low wage workers, and so LiLAs are designed so that individuals are able to take these accounts with them from one employer to another.

Voluntary Participation: In order to make the sacrifices of time, energy, and money involved in learning on one's own time, adults must be committed, and so the program must be a voluntary one.

WHAT MAKES LILAS DIFFERENT

The issue of financing postsecondary education received a great deal of attention during the Clinton administration. During that period, the Lifetime Learning Tax Credit and Hope Scholarships were created, adding to a substantial list of tax-favored education programs that include Coverdell Education Savings Accounts (Education IRAs) and section 127, as well as subsidized federal student loans (e.g., Perkins and Stafford loan programs) and federal grants (e.g., Pell and FSEOG), to name some of the biggest. Given this abundance of postsecondary educational assistance, why do we need LiLAs?

The above-mentioned programs have restrictions that limit their usefulness to working adults. They all have eligibility requirements that do not apply to the vast majority of working adults, and they lack any mechanism to encourage employer contributions. …

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