President Obama has backed away from a plan to end a tax break for "529" college saving plans after meeting a backlash from lawmakers from both parties. The White House, which had presented the plan as a way to end a tax break mainly enjoyed by the wealthy and replace it with a fairer—and much larger—tuition tax credit, now says the issue has become a "distraction" and it will focus on "education tax relief that has bipartisan support," reports the New York Times. House Speaker John Boehner had urged the president to drop what he called a tax hike, and Minority Leader Nancy Pelosi was among the Democrats calling for Obama to reconsider the move.
The 529 plan, which is sponsored by all 50 states, is "a pretty good deal, and one that's been around since 2001," says NPR's Tamara Keith. "But the White House says fewer than 3% of families use these accounts—and 70% of the money in them comes from families earning more than $200,000 a year." The Wall Street Journal, however, accuses Obama of trying to squeeze middle-class taxpayers, noting that as of last June, there were 11.8 million 529 accounts and the average balance was $20,671.