While Obama is getting all populistic in an attempt to pad his legacy, there's this:
Obama wants to reduce tax breaks for 529 plans
President Barack Obama is expected to propose a major change to 529 college-savings plans--removing a tax benefit that has attracted parents to these investment vehicles for years.
The president’s State of the Union address Tuesday night is expected to include a long list of proposed tax changes. Among them: no longer allowing earnings on new contributions in 529 plans to be withdrawn tax-free.
If that became law, it would be a major revision to 529 plans, and plan experts say such a change would likely result in contributions to these plans declining substantially. “Contributions would dry up in 529 plans, “ says Joe Hurley, founder of Savingforcollege.com, which tracks 529 plans.
President Obama’s proposal would allow the earnings on new contributions to grow tax-deferred, but treat them as ordinary income when withdrawals for expenses are made. (Earnings on contributions already made are not expected to be part of the proposal.) The same changes would apply to 529 prepaid tuition plans, under the president’s proposal, experts say.
The president is also expected to propose a similar change for Coverdell education savings accounts, which also allow earnings to be withdrawn tax-free for qualified expenses. Coverdells can be used for higher-education expenses as well as for school costs ...
What more need be said.