Alleviating College Costs
Since taking office, President Obama has been consistent in his message regarding higher education: Increasing college completion rates is essential to the health of our economy, and his administration is committed to helping the nation become a world leader in educational attainment.
He's also demonstrated a commitment to helping American students and their families manage rising college costs. Under the 2009 American Recovery and Reinvestment Act (ARRA), also known as the stimulus bill, the president instituted a new tax credit to help pay for college expenses.
The American Opportunity Credit modified the existing Hope Credit, making it available to people in both higher and lower income brackets and increasing the list of qualifying expenses. For example, required course materials can now be covered by the credit in addition to tuition.
The credit can also now be claimed for four years of college education instead of two. The IRS notes that most people who are eligible for the credit will qualify for the annual maximum of $2,500, which means that students can save up to $10,000 on college expenses over the course of their education.
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An Economic Imperative
According to the U.S. Treasury Department, the credit has increased tax cuts for higher education by 90 percent, 'putting that dream (of education) within reach of more than 12 million students,' in the president's words.
Unfortunately, that may soon change. Under the ARRA, the credit is only good for tax years 2009 and 2010, meaning that it is set to expire at the end of this year.
President Obama recently gave a speech urging Congress to make the American Opportunity Credit permanent. He argued passionately for the importance of making college accessible to all Americans:
'At a time when the unemployment rate for folks who've never gone to college is almost double what it is for those who have gone to college, when most of the new jobs being created will require some higher education, when countries that out-educate us today will out-compete us tomorrow, offering our children a world-class education isn't just a moral obligation, it's an economic imperative.'
But many people fear that Congress will ignore his plea. It will cost an estimated $58 billion to extend the credit over the next decade, and Congress has shown no interest in figuring out how make up for the shortfall. Furthermore, politicians are afraid to do anything that smacks of increasing the deficit during election season, and political commentators have expressed doubts that the lame duck Congress after November 2nd will take any interest in the issue.
Students: Tell Washington that this tax credit is important to you! Visit USA.gov to learn how to contact your Congressional representatives.