President Obama’s plan to provide two “free” years of community college to “everyone who’s willing to work for it” has gotten a lot of criticism from the right. Republicans in Congress certainly don’t like it. Critics point out the obvious: that there’s no such thing as “free.” Somebody has to pay for it. Community colleges haven’t been a good investment anyway, with low graduation rates in spite of the already wide availability of 100% tuition support. Students tend to treat the offer of community college with the same respect humans accord anything they didn’t have to work or sacrifice for.
But, again, somebody does have to pay to subsidize that twilight world of educational non-commitment. Obama’s got it covered. “Free” community college isn’t the only thing Obama wants to fund with the tax hikes he’ll be proposing in his State of the Union address this week. But people who’ve been working hard to save for their kids’ college tuition by putting money into tax-free 529 plans will find one of those hikes particularly galling, given the “free community college for all” proposal.
Americans for Tax Reform summarizes it as follows:
Under the Obama plan, earnings growth in a 529 plan would no longer be tax-free. Instead, earnings would face taxation upon withdrawal, even if the withdrawal is to pay for college. This was the law prior to 2001.
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