University of Tennessee law professor Glenn Reynolds explains that Barack Obama’s plan to offer “free” college may come at the expense of the middle class he supposedly cherishes and wants to help. Reynolds writes: “Bank robber Willie Sutton is said to have explained his career this way: ‘That’s where the money is.’ Whether Sutton ever really said that, it’s an aphorism that, according to Bloomberg’s Megan McArdle, explains President Obama’s plans to go after middle class assets like 529 college savings plans and home appreciation. Though millions of Americans have been putting money into ‘tax free’ 529 plans to save for their children’s increasingly expensive college educations, President Obama would change the law so that withdrawals from the plans to fund college would be taxed as ordinary income. So while you used to be able to get a nice tax benefit by saving for college, now you’ll be shelling out to Uncle Sam every time you withdraw to pay for Junior’s dorm fees. This doesn’t hurt the very rich – who just pay for college out of pocket – or the poor, who get financial aid, but it’s pretty rough on the middle- and upper-middle class. In a double-whammy, those withdrawals will show up as income on parents’ income tax forms, which are used to calculate financial aid, making them look richer, and hence reducing grants.” Ultimately, the GOP Congress won’t push Obama’s plan, but that doesn’t mean your money will always be safe. More…