Obama highlights tax credit to help college students

By DailyCollegian.com Staff

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President Barack Obama is trying to move forward on his agenda to make college more affordable for American students. According to a press release from the White House, Obama will hold a meeting today with college students and their families to explain the impact of the American Opportunity Tax Credit (AOTC). The credit is part of the American Recovery and Reinvestment Act.

The president has proposed to make the tax credit permanent in his FY2011 budget.

The treasury department has analyzed how the AOTC has made college more affordable and will release a report today unveiling its findings. According to the report, the AOTC has increased higher education tax benefits by over 90 percent, which helped over 12.5 million college students in 2009 pay for school. The number of students receiving aid from the tax credit increased by 400,000 from 2008 to 2009.

On average, recipients received $1,700 in tax credit in 2009, an increase of 75 percent over the Hope Credit or Lifetime Learning Credit recipients in 2008.

According to the treasury department report, 4.5 million students and families received a tax refund averaging $800 because of the refundable AOTC in 2009. Unlike the Hope Credit, which only is available two years, the AOTC is available for students for the duration of their undergraduate careers. If the AOTC is made permanent, a student could receive $10,000 over four years.

The AOTC phases out at a higher level than the Hope Credit did in the past. The Hope Credit phased out between approximately $100,000 and $120,000 for married couples who filed together and an estimated $50,000 to $60,000 for single taxpayers; while the AOTC phases out at about $160,000 and $180,000 for married couples and approximately $80,000 to $90,000 for single taxpayers. According to the report, this provides American families with a larger tax credit.

Along with creating the AOTC the American Recovery and Reinvestment Act increased the Pell Grant to $5,550 for the 2010 and 2011 award year.

N-Collegian News Staff