State Treasurer Don Stenberg expresses relief President Barack Obama has withdrawn a proposal to end the tax break that fuels contributions to 529 college savings plans.
Stenberg says he’s pleased the president has backed away from the proposal.
“It was an ill-advised plan,” Stenberg tells Nebraska Radio Network. “The 529 college savings plan is one of the few programs available to help Middle Class families save for college.”
Stenberg says it is hard to say on what the president based the proposal.
“But our experience here in Nebraska is that this is a program that’s very much used by Middle Class Nebraskans,” according to Stenberg. “The average account size for the Nebraska accounts is $12,750.”
The Nebraska Educational Savings Trust (NEST) managed by the Treasurer’s office offers four plans: NEST Direct College Savings Plan, NEST Advisor College Savings Plan, TD Ameritrade 529 College Savings Plan, and The State Farm College Savings Plan.
They have become quite popular, and not just in Nebraska.
Approximately 65,000 Nebraska families have opened accounts which hold an average of $12,750.
But those aren’t the only families investing in the Nebraska plans. Families throughout the country have been attracted to the plans and a total of 225,000 accounts have been taken out in Nebraska. Once all the accounts have been factored in, the average account balance is closer to $17,000.
The savings plans are called 529 plans after the section of the federal tax code that authorities them to accrue earnings tax free as long as withdrawals are used to offset college expenses.
Their popularity became apparent shortly after President Obama proposed eliminating the tax break to pay for his proposal to offer community college for free. The proposal caused a massive public uproar.
Stenberg says the public backlash against the proposal places the 529 plans in a very secure position.
“I think this experience has sent a pretty strong message that this is a good program, that Middle Class Americans use the program, like the program,” Stenberg says. “So, I don’t think we’ll see any attempts in the near future to do away with it.”