President Barack Obama has announced that he will be dropping his plan centered on ending the tax breaks for college savings accounts known as 529s.

The recent actions of Obama were spurred by criticism from the Republicans, as well as pleading from the Democrats. House Minority Leader Nancy Pelosi also pleaded to the President to drop the plan.

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The college savings accounts known as 529s are used by upper-middle and upper-class families most of the time. With it, families are able to save money for their children and make it grow tax-free.

However, this does nothing to benefit the lower-class families, while unfairly benefitting high-class families. It is because of this reasoning that the Administration was targeting the 529s last week.

If the plan would have pushed through, families would have needed to pay taxes upon the money being withdrawn from the trust fund.

This plan was only a small part of Obama's plan to cut taxes for the middle class, a White House official close to the situation said.

"Given it has become such a distraction, we're not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President's broader package of tax relief for childcare and working families," the official said.

Last Tuesday, House Speaker John Boehner called for Obama to drop the plan and highlighted new legislation that would expand on the 529s.

In a statement that Boehner released, he applauded Obama listening to the people. He also added that the plan would have hurt middle-class families who were already struggling to get ahead.

If Obama's plan would have pushed through, the taxes taken from there would have been used for an expansion of the American Opportunity tax credit which provides tax relief for higher-education expenses up to US $2,500 per student.

TagsBarack Obama, 529, college savings account, middle class