President Barack Obama is expected to propose a major change to 529 college-savings plans--removing a tax benefit that has attracted parents to these investment vehicles for years.

The president’s State of the Union address Tuesday night is expected to include a long list of proposed tax changes. Among them: no longer allowing earnings on new contributions in 529 plans to be withdrawn tax-free.

If that became law, it would be a major revision to 529 plans, and plan experts say such a change would likely result in contributions to these plans declining substantially. “Contributions would dry up in 529 plans, “ says Joe Hurley, founder of Savingforcollege.com, which tracks 529 plans.

President Obama’s proposal would allow the earnings on new contributions to grow tax-deferred, but treat them as ordinary income when withdrawals for expenses are made. (Earnings on contributions already made are not expected to be part of the proposal.) The same changes would apply to 529 prepaid tuition plans, under the president’s proposal, experts say.

The president is also expected to propose a similar change for Coverdell education savings accounts, which also allow earnings to be withdrawn tax-free for qualified expenses. Coverdells can be used for higher-education expenses as well as for school costs starting from when the child is in

Should the president’s proposal go into effect, the change wouldn’t be brand-new. When 529 plans launched in the 1990s, earnings withdrawn from the plans were taxed as ordinary income. The Economic Growth and Tax Relief Reconciliation Act that was signed into law in 2001 provided a temporary change to their tax treatment — which became permanent in 2006.

An expanded version of this report appears on WSJ.com