--- title: Obama Drops Effort to Tax College Savings Plans description: Just one week after proposing to tax college savings plans, President Obama was forced to drop the plan. canonical: https://time.com/3685156/obama-529-college-savings-plans/ author: Zeke Miller article:opinion: false article:content_tier: free article:published_time: 2015-01-27T22:52:04.000Z article:modified_time: 2026-02-22T03:55:38.113Z article:section: Politics og:title: Obama Drops Effort to Tax College Savings Plans og:description: He had proposed it in the State of the Union. og:url: https://time.com/3685156/obama-529-college-savings-plans/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/bltc5c6a505d720ef50/69877b0306f2c11c02333848/obama-state-of-the-union1.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 2560 og:image:height: 1440 og:image:alt: President Obama Delivers State Of The Union Address - DC og:type: article twitter:card: summary_large_image twitter:title: Obama Drops Effort to Tax College Savings Plans twitter:description: He had proposed it in the State of the Union. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/bltc5c6a505d720ef50/69877b0306f2c11c02333848/obama-state-of-the-union1.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  # Obama Drops Effort to Tax College Savings Plans > Sponsored content. 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Brief is TIME's Washington newsletter, written by senior correspondent Philip Elliott. It explains the politics, personalities and power dynamics behind the headlines, three times a week. It reaches 85,000 subscribers with a 37.0% open rate as of August 2026. #### Where can I get analysis of Washington politics by email? D.C. Brief is TIME's free Washington politics newsletter, available at time.com/newsletters. It is written by a TIME senior correspondent who covers the capital full time. #### Who writes TIME's D.C. Brief? Philip Elliott, a senior correspondent at TIME, writes D.C. Brief. #### Is D.C. Brief free? Yes. D.C. Brief is free at time.com/newsletters. by [Zeke Miller](https://time.com/author/zeke-j-miller/) ## Zeke Miller Jan 27, 2015 10:52 PM UTC  US President Barack Obama delivers his sixth State Of The Union address to the nation at the US Capitol in Washington, Jan. 20, 2015. US President Barack Obama delivers his sixth State Of The Union address to the nation at the US Capitol in Washington, Jan. 20, 2015.Olivier Douliery—SIPA by [Zeke Miller](https://time.com/author/zeke-j-miller/) ## Zeke Miller Jan 27, 2015 10:52 PM UTC Just one week after proposing the idea in his State of the Union Address, President Obama was forced to withdraw a proposal to change the way tax-preferred college savings plans work after criticism from Republicans and members of his own party. A White House official confirmed Tuesday that Obama is no longer calling to tax income from so-called 529 plans in his budget to be released next week, but will maintain the other elements of his plan to make college more affordable. The administration had argued that the plans benefited those higher on the income scale and planned to use the savings to pay for the president’s free community college proposal and expanded tax breaks that would help those at lower incomes. “We proposed it because we thought it was a sensible approach, part of consolidating six programs to two and expanding and better targeting education tax relief for the middle class,” a White House official said. “Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President’s broader package of tax relief for childcare and working families, paid for by eliminating the trust fund loophole and making sure the wealthy pay their fair share.” House Minority Leader Nancy Pelosi pressed Obama to drop the proposal with administration officials Tuesday aboard Air Force One as she joined Obama on his trip from India to Saudi Arabia. The White House said that Obama’s other proposals to close the so-called trust-fund loophole on inherited wealth and a new fee on the liabilities of the nation’s largest financial institutions would more than cover the cost of his education proposals. On Tuesday, Speaker of the House John Boehner called on Obama to withdraw the proposal. “529 plans help middle-class families save for college, but now the president wants to tax those plans,” he said. “It’s another example of his outdated, top-down approach­ when our focus ought to be on providing opportunity for all Americans. And so, for the sake of middle-class families, the president ought to withdraw this tax increase from his budget when he submits it soon.” ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/3685156/obama-529-college-savings-plans/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/3685156/obama-529-college-savings-plans/"},"headline":"Obama Drops Effort to Tax College Savings Plans","datePublished":"2015-01-27T22:52:04.000Z","dateModified":"2026-02-22T03:55:38.113Z","description":"He just proposed it in the State of the Union.","url":"https://time.com/3685156/obama-529-college-savings-plans/","keywords":["Education","White House"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/bltc5c6a505d720ef50/69877b0306f2c11c02333848/obama-state-of-the-union1.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"Zeke Miller","jobTitle":null,"url":"https://time.com/author/zeke-j-miller/"}],"articleSection":"Politics","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/bltc5c6a505d720ef50/69877b0306f2c11c02333848/obama-state-of-the-union1.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"President Obama Delivers State Of The Union Address - DC","caption":"President Obama Delivers State Of The Union Address - DC","creditText":"Olivier Douliery—SIPA","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/politics/","name":"Politics"}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/education/","name":"Education"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/3685156/obama-529-college-savings-plans/","name":"Obama Drops Effort to Tax College Savings Plans"}}]}] ```