President Obama has backed away from his proposal to roll back tax breaks for 529 college-savings plans amid mounting political pressure, The New York Times reports. The proposal was slated to be a piece of Mr. Obama’s budget plan for the 2016 fiscal year, due on Monday.
Under the initial proposal, 529 plans would be scaled back in favor of expanding the American Opportunity Tax Credit, out of a desire to better channel the benefits to lower-income families. The popular college-savings plans most benefit families with incomes over $200,000, while eligibility for the tuition tax credit cuts off at $180,000.
But the plan quickly became a political flash point, triggering an uproar from parents and dueling arguments about what was best for the middle class.
The White House told the Times that there would still be enough money to expand the tuition tax credit.