House Approves Modest Expansion of 529 College-Saving Plans

Seeking to capitalize on the recent brouhaha over President Obama’s effort to roll back tax breaks on 529 college-saving plans, the Republican-led House of Representatives has passed a bill that would modestly expand those plans.

The uncontroversial measure, which passed the chamber with bipartisan support, would allow plan participants to use the accounts to pay for computers and would let them redeposit refunds from colleges back into the accounts without taxes or penalties. If enacted, the legislation is expected to cost the government $51-million over a decade. The bill has bipartisan support in the Senate, and seems likely to be signed into law.

Wednesday’s 401-to-20 vote occurred less than a month after President Obama ditched his proposal, saying it had become a “distraction” from his broader tax-reform agenda. The plan had come under attack from members of both political parties, who said it would hurt the middle class.