White House Tells 529 Savers To Go To Community College

Conn Carroll
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Posted: Jan 23, 2015 2:30 PM
White House Tells 529 Savers To Go To Community College

White House Press Secretary Josh Earnest said Friday that middle-class families concerned about President Obama's plan to raise taxes on their college savings should just send their children to community college. 

Obama's plan raises taxes on families saving for college by eliminating the tax-free status of money withdrawn from a 529 savings accounts. "I was very surprised by the Obama 529 proposal because in many ways it is anti-middle class for families trying to afford college," SavingforCollege.com founder Joe Hurley told The New York Times

Asked to "square" Obama's State of the Union claim that he wanted to make college more affordable for middle-class families with his 529 tax hike, Earnest said, "The reforms the president has proposed for the 529 program are reforms that he would consider only in the context of the other education reforms that he put forward."

"And there are a variety of proposals the president put forward," Earnest continued, "some related to the tax code, but some also related to the president's proposal to make community college free for hard working students that are getting good grades. That would have the benefit of essentially cutting the cost of a four year education in half. If you can do the first two year at a community college and have them paid for then the next to years are something you can pay for and essentially your tuition costs have been cut in half."

Over one million middle class college students are currently benefitting from 529 plans and the median income for those families was $140,000Ninety-five percent of all 529 plan users have incomes below $250,000.