Is there such a thing as free college?

Well skipidy-dipidy-doo-dahh! The POTUS gave another SOTU speech recently. Somehow I just couldn’t get into the kumbaya when he went off on how the “rich” are not paying enough (when the top 1 percent is already paying almost 40 percent of all federal income taxes, and the top 10 percent pay 68 percent of all federal income taxes) ... really? Harrumph!

By the way, did you know the bottom 40 percent of all taxpayers pay zero federal income tax right now? In fact, that bottom 40 percent took an average of $18,950 from the federal government in the form of refundable credits, food stamps, welfare payments, etc. (This per the CBO of all sources).

The POTUS’ “proposal” would be paid for by breaking a promise to anybody (not just the top 1 percent) who wants to save for their children’s college education using a 529 plan. Basically, the way a 529 plan works is if you make contributions to it (which are not tax deductible, by the way), it grows tax free and any withdrawals for qualified higher education costs at some future date (tuition, room and board, books) are tax free. Sounds innocent enough. Actually a great idea to encourage folks to save their own money to help pay for college.

Well, the POTUS wanted to change withdrawing from a 529 plan into creating a taxable event on the accumulated earnings. I wonder, oh yes, I do wonder. Why in the blankity-blank does the great and mighty POTUS think a person would go through all the paperwork trouble to open a 529 plan if it will now be treated as just another savings or investment account that you pay taxes on the earnings? No matter what, folks should be saving for their children’s college, but now the POTUS has proposed to take away about the only reason to use a 529 plan in the first place.

Here’s an interesting statistic. Since the 529 plan accounts were started in 2001, U.S. families of all income levels have opened more than 12 million such accounts and have socked away more than $250 billion for college.

Let me be more specific. Lots of “middle class folks” have funded their own 529 plans.

That $250 billion number is what has the POTUS drooling. Me thinks he’s developing a “Robin Hood complex” — you know, take from the rich and give to the poor. Only this time he will be taking from the poor, too. (Remember, 529 plans are held by a broad spectrum of taxpayers, not just the rich).

What’s the prognosis on the POTUS’s proposal? Figure the proverbial “hell will freeze over” scenario before a Republican-controlled Congress would give him this. In fact, the POTUS himself has now even admitted this was a dumb idea and quietly withdrew it just the other day.

So, the moral of the story, if you haven’t started a 529 plan, start socking away money for your kids’ college, get started. It’s still a great idea, and at least for the foreseeable future, it will remain a usable tool. You just have to be disciplined enough to start putting some money aside. I know, sometimes life seems like there are more bills at the end of the month than money, but having a saving habit naturally means you must sacrifice something else. So for your kids’ sake, please consider doing this.

Did you hear? Proverbs 20:4 — “The sluggard does not plow after the autumn, so he begs during the harvest and has nothing.”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. He’s on Facebook and on the web at


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