President Obama wanted to tax them. He wanted you to think they were only for the rich. And even when public outcry forced him to scrap it, the White House still insisted the president’s proposed tax on the 529 college savings plans that millions of Americans rely on was good policy. So who is now saying more support for these plans “would be fantastic?”
Incredibly, the answer is Secretary of Education Arne Duncan.
At a town hall yesterday afternoon in Des Moines, Iowa, President Obama and Secretary Duncan were urged to support savings plans that help families put away money for college and avoid crushing student loan debt.
Without mentioning his own failed attempt to tax 529s, the New York Times reports President Obama “passed the question to Mr. Duncan.”
“‘My wife and I are putting money actively into 529s and trying to save, and getting the federal government to support that more, or encourage that, would be fantastic,’ Mr. Duncan said. ‘And again this is something we have to work with the Congress to do the right thing.’
“For parents trying to save for college, he added, ‘we need to incentivize that and reward that.’”
House Republicans couldn’t agree more. We led the fight to stop President Obama’s scheme to tax 529 plans, and then passed bipartisan legislation to expand them because we know:
- “529 Holders Are Middle Class Americans: According to SI [Strategic Insight] as of March 2014, close to 10 percent of 529 accounts are owned by households with income below $50,000, over 70 percent are owned by households with income below $150,000, and almost 95 percent of 529 accounts are in households with income below $250,000.” (College Savings Foundation)
- “Held By Families Who Otherwise Would Have Trouble Paying Their Kids’ Way” “There are 11.8 million 529 accounts, many I can attest held by families who otherwise would have trouble paying their kids’ way through a public four-year university, much less a high-end private school. … Tax college savings, and people save less.” (The Wenatchee World editorial)
- “Studies have demonstrated how the existence of any sort of college savings account substantially increases the chances of a child attending college. As little as $500 in a savings plan sees children three times as likely to enroll, and four times as likely to graduate from college…” (Rep. Lynn Jenkins column)
By expanding 529 accounts, we can make college more affordable and expand opportunities for millions of Americans. That’s why our plan keeps them tax free, allows students to use savings to buy a computer for school, eliminates unnecessary paperwork, and waives penalties on re-depositing withdrawals if a student is unable to complete a semester.
Sadly, six months later, the administration still hasn’t announced a formal position on this common-sense legislation that passed the House with more than 400 votes.
Hopefully, with Secretary Duncan’s support, that will finally change soon.