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President Obama reiterated his call to make two-year degrees, "as free and universal in America as high school is today" in his State of the Union address last week. He also declared, "I want to work with this Congress, to make sure Americans already burdened with student loans can reduce their monthly payments, so that student debt doesn't derail anyone's dreams."

The Republican-led Congress is unlikely to support the president's proposal for making community college free. Responding to the State of the Union address, Rep. John Kline (R-MN), chairman of the House committee that oversees education policy stated, "Bigger and bloated government isn't the solution to the problems facing our nation. Instead of making promises the American people can't afford, the president has a responsibility to meet our existing commitments."

Congress will consider his recent proposals, as well as a number of legislative changes, that would modify the way students and families pay for college as members tackle the rewrite of the Higher Education Act (HEA).

In the State of the Union speech and at recent rallies and events around the nation, President Obama promoted a new tax plan that would simplify the American Opportunity Tax Credit but limit the tools that encourage families to save and plan for college—specifically 529 plans and Coverdell Education Savings accounts. The information released by the White House to date does not provide full details, but in depth explanations are expected to appear in the February 2 release of the president's budget request for FY16.

For several years, the White House and congressional leaders have been exploring possible ideas for reforming the tax code. However, there remain deep partisan divides on fundamentals—from the role taxes will play in addressing the deficit and economic growth to whether reform should include both business and individual tax reform.

A great deal depends on the decisions Republican leaders make in crafting—and passing—a budget resolution. The budget resolution, which will be hammered out over the next few months, could include reconciliation instructions that clear the path to tax reform and consideration of the White House proposals.


Liz Clark

Vice President, Policy and Research


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