GOP pushes Obama on expanded college savings proposal
Just days after the House of Representatives passed an expansion of 529 tax-deductible college savings accounts, the Republican Party called for President Obama's support of the bipartisan bill.
"Why would we make saving for college even harder? We talk all the time about rewarding people who work hard and play by the rules - well, that's what 529 plans are," Rep. Jim Renacci, R-Ohio, said in the party's weekly address.
"They empower families to set up accounts for their children right from when they're born," Renacci continued. "And then down the line they can use that money - tax-free - on books, fees, tuition and room-and-board."
The legislation, also popular among Democrats, passed out of the lower chamber with just over 400 votes, and House Republicans are now pushing for continued support from the White House.
The congressional proposal comes after Mr. Obama backed off a plan that would have significantly cut 529 college savings accounts. The unpopular proposition, which the president announced during his January State of the Union address, was knocked by Renacci as an attack against the middle class.
"People were understandably outraged," Renacci said. "Thankfully, after a public outcry, the president was forced to drop the idea."
- Obama drops plans to scale back college savings plans
- GOP: Expand 529 tax-deductible college savings accounts
After backlash from both sides of the aisle -- including a personal rebuke from House Minority Leader Nancy Pelosi -- the White House was forced to back down on the measure.
The modernized 529 provisions recently passed in the House would qualify computers as expenses available to 529 accounts, reduce administrative burdens and prohibit taxes or penalties for college tuition refunds.
Nearly 12 million such accounts exist across the United States, Renacci said.
"Why would we stop that growth? So the government can take even more of the money we've worked so hard to put away?" Renacci asked.
In his own address Saturday, Mr. Obama attempted to garner support for a newly drafted Labor Department rule prohibiting retirement advisers from considering their own financial interests ahead of their clients'.
"If you're working hard and putting away money, you should have the peace of mind that the financial advice you're getting is sound and that your investments are protected," the president said. "Middle-class families cannot afford to lose their hard-earned savings after a lifetime of work. They deserve to be treated with fairness and respect."
Earlier in the week, the White House called on the Department of Labor to update existing standards that would prevent "backdoor payments and hidden fees in exchange for steering people into bad investments." Shortly after, the agency issued a new draft rule that would bar advisers from recommending low-return investments that would make more for the advisers.
"While many financial advisers support these basic safeguards to prevent abuse, I know some special interests will fight this with everything they've got," the president said. "But while we welcome different perspectives and ideas on how to move forward, what I won't accept is the notion that there's nothing we can do to make sure that hard-working, responsible Americans who scrimp and save can retire with security and dignity."
Before its release in a public comment period, the draft rule will be sent to the Office of Management and Budget next week.