Rand Paul releases ‘HELPER’ plan to make part of college tax-deductible

Sen. Rand Paul last week put forth the first bona fide plan to help make college more affordable, the Higher Education Loan Payment and Enhanced Retirement Act (HELPER), which essentially makes part of the cost of college tax-deductible.

It would permit families and children to take money out of their 401(k)s or IRAs — up to $5,250 per person — to help pay for college. While it doesn’t address the infuriatingly high tuition charged by “not-for-profit” colleges, it is an important starting point.

The key component of Paul’s bill is that it allows access to money in personal retirement and 401(k) accounts tax-free and without IRS penalties. So while $5,250 may not sound like much in the face of $35,000- to $65,000-per-year in tuition, room and board, it is meaningful.

And if there are two working parents, each can take the $5,250 from their retirement accounts — plus the new graduate can access his or her own 401(k) or IRA funds tax- and penalty-free to pay down college debt.

Political opposition to this plan ought to be scant, and there likely won’t be many on Main Street who don’t like it, either.

However, there’s still the annoying issue of the $600 billion languishing tax-free in university endowments.

A tuition-reduction program funded through these huge pools of money would pair well with Paul’s fine proposal. The schools could at least agree to pay taxes on all their gains, even if they won’t commit to lowering tuition by the same $5,250 per student each year.

Kudos to the Libertarian senator from Kentucky. This piece of legislation is one that every American can win with. It’s short, simple and direct, and lets people tap their locked-away 401(k) and IRA money without penalty.

This is real progress.