Obama Drops Effort to Tax College Savings Plans

TIME

Just one week after proposing the idea in his State of the Union Address, President Obama was forced to withdraw a proposal to change the way tax-preferred college savings plans work after criticism from Republicans and members of his own party.

A White House official confirmed Tuesday that Obama is no longer calling to tax income from so-called 529 plans in his budget to be released next week, but will maintain the other elements of his plan to make college more affordable. The administration had argued that the plans benefited those higher on the income scale and planned to use the savings to pay for the president’s free community college proposal and expanded tax breaks that would help those at lower incomes.

“We proposed it because we thought it was a sensible approach, part of consolidating six programs to two and expanding and better targeting education tax relief for the…

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