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Obama says scaling back 529 college savings benefits wasn't worth it after opposition arose

02/06/2015 04:06 EST | Updated 04/08/2015 05:59 EDT
INDIANAPOLIS - President Barack Obama said Friday that he dropped a widely criticized plan to scale back tax benefits for college savings accounts because the savings weren't worth it.

Obama, who revealed that he uses the 529 savings accounts for his own daughters, said he looked at reducing the tax savings because the accounts tend to be used by "folks who were a little more on the high end." He says other taxpayers struggled to save enough to participate.

Obama initially planned to use the savings of about $1 billion over 10 years to help fund his proposal to make two years of community college free for all. "Our thinking was you could save money by eliminating the 529 and shifting it into some other loan programs that would be more broadly based," Obama said.

But he quickly backed off after lawmakers from both parties objected.

"It wasn't worth it for us to eliminate it," Obama said. "The savings weren't that great. So we actually, based on response, changed our mind and are going to be paying for the two years of free community college with other sources."

Obama's remarks were his first on the matter since the White House announced the shift last week. They came in response to a question from a woman from the crowd of nearly 400 who said she uses the accounts to help her grandchildren.

The president mixed politics with the personal as he touted his higher education agenda while talking about his own experience as a one-time student and the father of a daughter on her own college hunt.

In response to a questioner who asked about help paying the rising costs of books, Obama said he understood the problem all too well after having to buy his own at undergraduate and law school.

"I addition to the bonds of love, we had the bonds of debt. Our net worth was negative," Obama said.

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