Obama's Plan to Tax College Savings Accounts Is Less Scary Than It Sounds

A proposal to tax 529 plans would affect a small number of savers

New graduates walk with the processional before their commencement at Princeton University.

Photographer: Michael Nagle

A simpler and better-targeted system. Those are the terms the White House is using to describe President Obama’s State of the Union proposal for revamping tax-based financial aid for college students and their parents. Anyone who has tried to sort through the jumble of programs—or groused about the tax breaks favoring the wealthy—will appreciate the impulse to improve programs aimed at helping more families afford college.

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