Americans should be able to dip into their 401(k) plans and pretax savings and pay off their college debts, Sen. Rand Paul said Thursday while explaining his proposed bill to help Americans with their student loan debts.
"What this would allow for is not only that you could use money that's already in your IRA," the Kentucky Republican told Fox News' "Fox and Friends."
"It allows you to specifically put money in there. So let's say you are already paying your student loans off or paying them with after-tax dollars. This would allow you to take that money, put it in the 401(k) and pay with pretax dollars."
Essentially, he added, the plan would make college spending tax-free, "which depending on your tax bracket is about a 20% to 30% reduction in the price of college. This would be the most dramatic thing to happen to college tuition and helping students pay for it, really, in the history of government involvement."
The plan also does not cost the government anything, said Paul.
"Several of the Democrats on the presidential stage have offered free" college, said Paul. "Alarm bells should go off when somebody offers you something for free because there is no free lunch. Really, their programs would have to be paid for with massive taxes on the working class and middle class."
However, Paul said his plan says if people save, the government will not tax them on the money and they can use it to pay for college."
Paul admitted that with the "little bit of acrimony" on Capitol Hill, the push is on to get Democrats behind the bill, but he does think it has a chance of passing.
"Free college education, which isn't really free, has no chance on Capitol Hill," said Paul. "This uses a standard form of retirement income, IRAs, everybody knows what they are, 401(k)s, and uses that vehicle and says, you know what? You can pay for college out of that."
© 2021 Newsmax. All rights reserved.