FOR IMMEDIATE RELEASE: December 23, 2010
SCHUMER REVEALS: NY'ERs HAVE MORE THAN $1 BILLION IN UNCLAIMED COLLEGE TUITION TAX CREDITS - SCHUMER URGES COLLEGE AND UNIVERSITY PRESIDENTS TO ALERT STUDENTS AND FAMILIES TO WINDFALL
Credit Will Be A Major Boost For Middle Class Families - For Every $1 Spent on College Tuition, Families Could Get $1 Off on Taxes, Up to $2,500 A Year
Today, U.S. Senator Charles E. Schumer announced a major campaign to make sure that every eligible family takes advantage of the Schumer authored $2,500 college tuition tax credit. The credit provides middle class families with children in college with $1 back on their taxes for every $1 spent on tuition, up to $2,500 per year, but less than 50% percent of eligible families claimed the credit on their 2009 taxes. Standing at Schenectady County Community College, Schumer asked the Chancellors of SUNY and CUNY as well as all college and university presidents to make their students aware of this tax credit and said that last year’s filings can still be amended, meaning that New Yorkers can still recover the over $1 billion in unclaimed credits.
“At a time when the cost of a college education is rising faster than ever, $2,500 could make a real difference in a family’s ability to pay tuition,” said Schumer. “The bad news is that far too many families don’t know that this credit exists, but the good news is that it’s not too late to put that cash in your pocket, even if you forgot to take the credit last year. That’s why I’ll be working with college and university presidents from across the state to make sure that we are leaving no stone unturned in getting this information out to college students and their parents.”
The Schumer authored college tuition tax credit was originally signed into law as part of the American Recovery and Reinvestment Act of 2009, but was due to expire at the of 2010. However, Schumer was able to include a 2-year extension as part of the tax package that passed the Senate earlier this month. The legislation transformed the existing HOPE tuition credit into the $2,500 American Opportunity Tax Credit. The new Schumer credit represents an overall benefit that is at least two-and-a-half times greater than the previous tuition benefits. For families with children in college but who do not have enough income tax liability to qualify for the full credit, the law provides a refund worth up to 30 percent of the credit for each student.
In October of 2010 the U.S. Treasury released a report (http://www.treasury.gov/about/organizational-structure/offices/Tax-Policy/Documents/AOTC%20report%2010.12%20FINAL.pdf) that shows that while the tax credit makes a big difference for those who take it, only 43% percent of New York eligible families claim it on their tax returns. Because last year’s tax returns are still amenable, that means that there is likely over $1 billion that New York families could claim right now, in addition to whatever tax savings they would see on next year’s tax bill.
Middle class New Yorkers across the state will see benefits from the extension of the college tuition tax credit. According to the report issued by Schumer’s office today, compiled using data from the U.S. Treasury and the New York State Education Department, New Yorkers have $1.08 billion in unclaimed tax credits from their 2009 tax filings. By amending those filings, New Yorkers could see that money in their pockets. Below is a chart showing unclaimed college tuition tax credits by region:
In the last decade, college tuition has skyrocketed across the country in light of rising costs. 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.
A full copy of Schumer’s letter to New York State College and University Presidents can be seen below:
December 23, 2010
Nancy L. Zimpher Matthew Goldstein
State University of New York City University of New York
State University Plaza, 353 Broadway 535 East 80th Street
Albany, New York 12246 New York, NY 10075
Commission on Independent Colleges and Universities
17 Elk Street, PO Box 7289
Albany, New York 12224
Dear New York State College and University Presidents:
New York State is home to over 250 world-class colleges and universities, both public and private, which attract students from across the state, country and world. However, with the recent economic downturn and the ever-rising costs of running and attending college, students and parents alike are more concerned than ever about their ability to pay for college. That is why I write to urge you to take every practical step possible, including e-mails to students and their families, to ensure that everyone is aware of—and takes full advantage of—the American Opportunity Tax Credit. As you know, the American Recovery and Reinvestment Act, signed into law last year by President Obama, included a $2,500 tax credit for higher education. I am proud to say I authored and championed this provision, and I am pleased to report that a two-year extension of this important credit was included in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, recently passed by the Senate and signed into law by the President. As the new semester approaches and families draw up their budget, now is the time to publicize the provision.
In the past, too many families have missed out on education tax benefits and I am concerned that the trend will continue, even with this newer, more generous credit. According to a recent Treasury Department report, as few as 43% of potentially eligible families took advantage of the tuition credit last year. If that rate stays the same, New Yorkers will be missing out on hundreds of millions of dollars this tax year. Given the minimal cost of including a notice about the AOTC with tuition bills, or communicating with all students electronically, I respectfully ask that all New York colleges and universities remind all potentially eligible students about the credit – and the ability to file amended returns for 2009 in the event that they or their parents did not claim the credit when it was first created
Extensive information on how the tax credit works—including eligibility—is available on the IRS’s website here: http://www.irs.gov/newsroom/article/0,,id=211309,00.html. Thank you in advance for your efforts to promote the use of the credit. If you have specific questions about the provision, please do not hesitate to contact Jeff Hamond on my staff at 202.224.6542.
Charles E. Schumer
United States Senator