Bowing to pressure from Republicans and college savings proponents, President Barack Obama withdrew his plan to impose a tax on qualified distributions from 529 college savings plans.
After House Speaker John Boehner, R-Ohio, as well as Rep. Nancy Pelosi, D-Calif., both criticized the plan, the Wall Street Journal reported that a White House official said late Tuesday: “Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision.”
Joe Hurley, founder of Savingforcollege.com, told ThinkAdvisor in a Wednesday email message that “the reaction of American families to this [529 tax] proposal should have been anticipated by the president. After all, middle-class Americans have been sacrificing to save for their children and they are proud and protective of their 529 accounts.”
Published reports say that the administration will now focus on efforts delivering a “larger package” of education tax relief that will have bipartisan support.
Two bills have been introduced in January to help students reduce their college debt load and improve college savings plans.
Rep. John Delaney, D-Md., introduced legislation Jan. 21 to allow student debt to be discharged in bankruptcy.