Some critics claim that President Obama’s proposal to streamline and better target tax credits for higher education represents an attack on middle-class families, particularly because of the limits it would impose on so-called “529” accounts. That’s backward: the plan overall would do more to help both middle-class and lower-income families afford college.

The President’s plan would scale back tax benefits that disproportionately benefit high-income filers and redirect them toward low- and middle-income students — the people who most need help affording college. By likely enabling more people to attend college, it would help them and the economy as a whole by contributing to a better-educated workforce.

Like many current tax breaks (such as those for retirement saving and mortgage interest), tax benefits for higher education give the biggest benefits to high- and upper-middle-income families since they’re in the highest tax brackets. This means that the tax subsidies are less effective than they could be in boosting college enrollment because they largely go to people who likely would attend college anyway, while doing too little for many people from low- and middle-income families who simply can’t afford college without help.

Further, the tax subsidies are delivered through a maze of overlapping provisions, so many eligible families aren’t aware of them.

That’s why many education policy groups (see here, here, and here) have called for streamlining and better targeting education tax breaks. Representatives Danny Davis (D-IL) and Diane Black (R-TN) introduced a bipartisan bill in 2013 based on these principles, and former House Ways and Means Committee Chairman Dave Camp’s tax reform plan included a similar proposal.

The President’s plan also uses this framework. It would shrink some of the education tax subsidies most heavily focused on high-income families and use the savings to strengthen and make permanent the education tax incentive best targeted on low- and middle-income families: the American Opportunity Tax Credit (AOTC).

The AOTC is partially refundable, which means families with incomes too low to owe federal income tax can receive a partial credit. But under current law, the AOTC will expire at the end of 2017 and be replaced by a smaller, non-refundable education tax credit called the Hope Credit. The President’s proposal would improve the AOTC for both low-income and middle-class families by making it permanent and raising the amount of the AOTC that is refundable.

At the same time, the President’s plan would limit a number of inefficient tax benefits that are heavily tilted toward upper-income families, including those for 529 plans. Currently, filers don’t owe taxes on the earnings from 529 plans either as they accrue or when those earnings are withdrawn to pay for higher education.

Some 80 percent of the benefits of 529 plans go to households with incomes above $150,000, Survey of Consumer Finances data show; about 70 percent go to households with incomes above $200,000. That’s because higher-income households can most afford to save substantial amounts for college, and because tax exemptions are worth the most to them, saving them up to 40 cents (for people in the top income tax bracket) per dollar earned in these plans that's used for higher education expenses. Since there are no income limits on using the plans, families with multi-million-dollar incomes can amass huge 529 accounts and benefit very handsomely from this tax break.

Under the President’s plan, earnings in 529 accounts would remain tax-free as they accrue, but filers would pay tax on the gains when they withdraw the funds, so filers would still benefit from deferring taxes on those gains. And the proposal would only apply to new deposits in 529 accounts; the billions of dollars already in those accounts would be entirely exempt.

The University of Michigan’s Professor Susan Dynarski, a top expert on education tax policy, has praised the President’s 529 proposal as “smart,” commenting that the current treatment of 529s is “Incredibly expensive, poorly targeted, [and] ineffective.”

Scaling back the 529 tax subsidy for high-income filers and redirecting the funds towards low- and middle-income filers who most need support to afford higher education is sound policy that would make higher education more affordable for more low- and middle-income families.

In fact, overall, the President’s proposal would increase the total amount of resources provided in higher education tax subsidies, benefiting middle- and low-income families, and pay for that increase by reducing inefficient tax subsidies that overwhelmingly benefit people at the top of the income scale. Since aid for families who don't have high incomes would increase, opponents’ claims that the plan would increase student debt levels are hard to fathom. The effect is likely to be just the opposite.