All Right So How Should We Pay For College Then

As you might have heard, Obama’s plan to adjust how 529 college savings account plans are taxed has been scrapped. The NYT’s Upshot blog explains how the President ran afoul of what has become conventional wisdom: you can suggest asking for more from the rich, but anything that affects the “merely affluent” is DOA.

the White House proposed to end tax advantages for new deposits into 529 accounts. Instead, they would expand tax credits for tuition, with benefits on a scale that slides the opposite way: declining in value as a family’s income rises, phasing out entirely at a family income of $180,000.

Bloomberg’s Megan McArdle calls this swap “a plan to redistribute money from the upper middle class to the lower middle class.” While it’s true that 529 accounts are not exactly a sop to hedge fund managers like the carried interest loophole, that characterization involves taking quite a broad sweep for “upper middle,” and reflects how the idea that $200,000 is a normal, not-rich family income, at least along the Acela corridor, has taken hold. But if you look at the data, $200,000 is not a normal income, even in a prosperous suburban county like Westchester, N.Y., where 77 percent of married couples are somehow managing to get by on less. In Montgomery County outside Washington, the figure is 72 percent. These figures start to seem normal to politicians only because, when they’re not hanging out with ultra-wealthy donors, they tend to spend time with the sort of pretty-wealthy professionals who use 529 accounts.

If Robin Leach hosted a show these days, it would be called “The Lifestyles of the Pretty Wealthy and Disproportionately Influential.”

“$200,000 is not a normal income.” It is, however, as the NYT points out, “normal” for two-earner families consisting of higher echelon journalists, tastemakers, and pundits, who earn that much and yet are ideologically and emotionally wedded to their identity as middle class. Here’s a measured response from one such fellow at The Federalist.

This is not so much a rational calculation about how to finance the behemoth state. This is an admission by a man who has no more election campaigns to run, and therefore no pragmatic constraints, about his real outlook and real preferences. A president who just a few weeks ago hailed the triumph of a supposed “middle-class economics” is revealing his hatred and contempt for the middle class. …

Working to get our kids ready for a four-year college — academically and financially — is what the middle class does. There is perhaps no activity that is more middle-class-ish than that. And you can see why: it’s our way of ensuring that the next generation stays in the middle class. We’re not well-off enough to give them multi-million-dollar inheritances, but we are well-off enough to give them an education that will qualify them for a white-collar job. So this is treated almost as a sacred obligation. But do that, and Obama thinks you should get taxed. On the other hand, if you put aside no money and send your kid for a community college education that will qualify him, at most, for high-end blue-collar work, Obama thinks you should get a subsidy.

That is some impressive outrage, isn’t it? You’d think Obama had suggested reinstating the draft.

But, my goodness, if being middle-class means being able to prepare your children (plural!) for a four-year college, means being “well-off enough to give them an education,” that means having hundreds of thousands of dollars at your disposal. Even in-state tuition at a place like UVA costs about $100,000 total over four years. That is a high bar. What about all the multitudes of middle-class families who can’t afford that “sacred obligation”? Have they failed at being middle-class? Can we, the state, really not help them, especially as tuition continues to soar?

I guess the real bottom-line question is, if we can’t adjust the tax benefits of the richest Americans to help the less-well-off ones also attend college, how do we prioritize higher education? How do we make it possible for, say, the kids of former coal miners to do something other than mine coal and then collect disability checks themselves? How do we make college something available to everyone who’s qualified and not merely the children of the punditocracy?

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