Obama cites outcry in reversal on college savings plan

Reuters News
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Posted: Feb 06, 2015 5:39 PM

By Julia Edwards

INDIANAPOLIS (Reuters) - President Barack Obama on Friday said that a public backlash to his budget proposal that would have eliminated the "529" tax-free college savings program convinced him to abandon the idea.

"I'll be honest with you, there were enough people who already were utilizing 529s that they started feeling as if, well, you know, if changing like this in midstream ... it wasn't worth it for us to eliminate it," Obama said, responding to a question at Ivy Tech Community College.

The plan to eliminate it was met with an immediate backlash from middle-class savers, as well as Republicans and Democrats in Congress.

Obama said he first proposed the change because most people using the tax-free accounts are on “the high end” of earners.

But members of his administration “changed our mind,” Obama said because of public outcry.

Obama said a plan to pay for making the first two years of community college free would instead depend more heavily on closing tax loopholes.

Obama aimed to boost support for the community college plan, one of many proposals he has laid out recently in his State of the Union address last month and 2016 budget on Monday, which are intended to strengthen the middle class.

The plan and its $60 billion price tag over 10 years has faced skepticism from Republican lawmakers.

Obama noted that he has established 529 college savings plans for his two daughters.

(Reporting by Julia Edwards; Editing by Bernard Orr)