Just read a Forbes article on this, and glad to see a thread was fired up for discussion. This article lays the change to 529 plans out very nicely and makes it easy to understand:
http://www.forbes.com/sites/ryanellis/2015/01/19/obamas-new-state-of-the-union-tax-hike-on-middle-class-529-college-savers/2/
College is hard enough for people to pay for, with costs increasing at rates way higher than inflation. This tax law change is a kick in the stones to families that fall between writing a check in full each semester and simply unable to afford to send their children to college. Pretty much, most people.
Whether it's a Democrat or Republican that comes into office in 2016,
I hope they'd peel this law change back. It's just going to make the college tuition bubble problem even worse, reducing a parent's ability to help their children out as they can at the rate of the tax haircut.