By TNH Editorial Staff
Individuals around the UNH community, whether they be students, faculty or administrators, have likely had an ear tuned towards the national discussion around affordable college tuition since President Obama called for the rolling back of tax benefits for “529” college-savings plans during his State of the Union Address back on Jan. 22.
The president’s proposal to effectively tax middle-class Americans — or at least those who fall within the disputed boundaries of the “middle class” — on these 529 plans would help pay for free community college and relay subsidies to students in dire financial situations.
The proposal to roll back credits on this plan, which allows holders to save and withdraw tax-free income for educational costs, was met with bipartisan backlash that the White House had not seemingly anticipated. Finally, the president retreated on this part of the plan last week, realizing that although the plan may be sound in its intentions, it was not suitable for political play.
Practically, the proposal is reasonable: 529s excessively benefit wealthy Americans who likely have a simpler time saving for a beneficiary’s college education anyway. Plus, rolling back benefits could reclaim up to $1.6 billion in tax revenue.
So whom would this policy hurt? Wealthy Americans on the fringe between the middle and upper classes, and of course the finance firms that sell the plans. According to an article that appeared in the New York Times on Jan. 27, about 80 percent of tax benefits for the roughly seven million existing 529 plans go to households with an income about $150,000. Furthermore, some 70 percent of benefits go to households with an income of $200,000 or more. These numbers seem drastically high, but this is mostly due to the financial flexibility of such households that they can invest more.
There is plenty more discussion on the horizon regarding subsidized higher education, which some argue could further devalue the worth of the standard bachelor’s degree. It is a nearly impossible balance to strike, where the value of an education is still marketable in the search for jobs while also making sure education is an attainable opportunity for every American.
Whether subsidizing education is a good idea remains up for debate. The stance of this paper is everyone should have an opportunity to attend college. Not everyone is born into the same circumstance and paying college tuition is certainly easier for some families than others. But no matter what economic background someone might come from, there needs to be a path to a college degree.
Obama's proposal on 529s a political misstep
By TNH Editorial Staff