February 2, 2015
President Obama is set to release his budget next week, and clues about its contents are already streaming in. Several items related to higher education have been raising concern across America, including among high-profile members of the president’s own party. Many families in Florida are worried about what the administration’s proposals would mean for their education plans, and rightly so.
At the center of Obama’s higher-education initiative are two separate proposals, both of which place an enormous burden on taxpayers. The first is to expand the American Opportunity Tax Credit that was created as a part of the stimulus plan in 2009. The second is to provide free community-college education to virtually every American.
The president’s goal of a more accessible and affordable college degree is one I share, but these two ideas won’t work. They avoid dealing with the real problem at play in higher education, which is the unnecessarily high cost of a modern degree. For years now, the federal government has tried to paper over this problem with taxpayer money rather than solve it. The approach has failed, but now the president wants to double down on it rather than try something new.
The answer is not to spend more on failed ideas; the answer is to find better ideas. Our ideas should attack the crisis at its source by lowering the costs of a modern degree and helping families prepare for those costs. If we do this, families won’t struggle as much to afford college — and the government won’t have to spend as much, or tax as much, to help them pay.
Best of all, once families have multiple affordable higher-education options, the decision of where to get a degree will be up to them rather than Washington. Instead of feeling pressured to attend community college, for example, because it’s the one option paid for by the government, they will feel free to choose the education option that’s right for them.
One of the items recently announced for the president’s budget gave us a perfect illustration of why his approach to higher education is flawed. The idea was to start taxing the earnings of 529 education savings plans when those earnings are withdrawn. This would have essentially ended 529 accounts — including the Florida Prepaid and Coverdell plans — by making them ineffective vehicles for saving, which would have been a heavy blow to the middle-class families that benefit from them the most.
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