FOR IMMEDIATE RELEASE: January 14, 2009
WITH STIMULUS BILL APPROACHING: SCHUMER ANNOUNCES PUSH TO INCLUDE HIS NEW COLLEGE TUITION TAX CREDIT IN ECONOMIC STIMULUS PACKAGE - PLAN COULD QUADRUPLE MAXIMUM BENEFIT AND SAVE MIDDLE CLASS FAMILIES THOUSANDS OF DOLLARS
Schumer: This Expanded Credit Is Likely To Be Included in New Economic Stimulus Package
Credit Is New Approach & Major Change - For Every $1 Spent On College Tuition, Middle Class Families Could Get $1 Off On Taxes; Schumer Pushing for Up To $4,000 A Year - Better Than Present Deduction That Saves Families Only 15 Or 25 Cents On The Dollar
If Passed, Families in Upstate New York Could Use the New Tax Credit Toward Tuition and Textbook Costs for Each Student As Soon As This Tax Year
U.S. Senator Charles E. Schumer today announced he will introduce his bill to quadruple the value of the current college tuition tax benefits and push to pass it as part of the economic recovery package currently being put together in Congress. The bill is a new approach and a major change to the current college tuition tax benefit. The new credit will save middle class families up to $4,000 on their taxes per student each year. Schumer said today there is a good chance that this credit could pass with the economic stimulus package, as it has received broad support from the Finance Committee and the Obama Administration. If so, middle class families across Upstate New York could use the new tax credit as soon as this tax year for returns filed next year. Schumer said the savings is needed now more than ever as the economic downturn takes its toll on middle class families and tuition costs skyrocket.
"A college education is a necessity for
In the last decade, college tuition has skyrocketed across the country in light of rising costs. According to the College Board, private, four-year college tuition rose 6.3 percent last year while public four-year school tuition rose 6.6 percent. In Upstate New York, public college tuition has risen 42 percent, from an average of $4,195 in 2002 to $5,912 this year. Tuition has risen just as quickly at Upstate New York’s private colleges, up 44 percent from an average $19,046 in 2002 to $27,216 this year.
The result of skyrocketing tuition is more students are graduating with massive amounts of debt. About 75 percent of students attending four-year colleges, public or private, in Upstate New York graduate with debt, according to the Institute for College Access and Success. The average debt of these graduates is averages almost $22,000. Here is how the numbers break down across the state.
With the recent tightening in the student loan credit market, more students of all income levels are being forced into borrowing from both federal and private lenders to finance college and they are borrowing in higher amounts than ever before. Others are forced to make tough decisions about whether or not higher education is feasible. According to the federal Advisory Committee on Student Financial Assistance, cost factors prevent 48 percent of college-qualified high school graduates from attending a four-year institution and 22 percent from attending any college at all.
To provide real relief for middle class families saddled with skyrocketing tuition costs and to help prevent further decreases in college enrollment, Schumer today announced that he is fighting to significantly increase the tax benefits provided by the current higher education tax incentives and push for his bill to be included as part of the economic recovery package. Schumer said his plan could quadruple the middle class tax benefit in many cases, save
Schumer’s bill, which is being pushed in the House by Reps. Lloyd Doggett (D-TX) and Tom Periello (D-VA), would combine the HOPE and Lifetime Learning credits and the above-the-line tuition tax deduction into one credit of up to $4,000 per student. For middle class families currently taking the HOPE credit, making less than $60,000, the new credit would more than double the existing tax credit. If these families currently use the college tuition deduction, the maximum tax benefit could be quadrupled or more, depending on a family’s circumstances and tuition costs. The tax credit would go into effect for tax year 2009 and help the millions of individuals that apply for higher education tax credits each year. The bill is written in such a way so that even students with modest tuition—such as those attending a community college—still receive a sizeable credit. The lifetime benefit per student is set at $16,000, and it can be used for college or graduate school. The new credit will also include expenses for tuition, fees, and textbooks and can be used for up to three students per household. Up to 50 percent of the cost of textbooks, up to $400, can be claimed as part of the $4,000 credit each year.
The college tuition tax credit bill works much better than the current tax incentives out there and would save families thousands more dollars every year. For example, a family making $60,000 this year would save $600 this year, if they use the current tuition deduction, or $1,800, if they use the HOPE credit. Under the new Schumer proposal, they would see their entire federal tax liability disappear and they would save $3,265 for each student, every year. Under the current higher education tax incentives, that family would only have saved $600. A family making $70,000 a year, with $8,000 in out of pocket tuition costs, would save the full $4,000 under Schumer’s new bill. Under the current incentives, they would likely save just $600 because they would not qualify for the HOPE credit at all.