02.25.15

WITH COLLEGE COSTS SOARING, SCHUMER LAUNCHES PUSH TO INCREASE & EXPAND COLLEGE TUITION TAX CREDIT THAT PROVIDES MUCH-NEEDED RELIEF FOR UPSTATE NY MIDDLE CLASS FAMILIES – NEW BILL WOULD MAKE MORE FAMILIES ELIGIBLE TO RECEIVE TAX CREDIT & GROW SAVINGS TO UP TO $3K PER YEAR

Schumer-Authored Tax Credit Already Provides A Major Boost For Middle Class Families Across Upstate NY, But New Bill Would Grow Annual Savings to $3,000 Per Year & Extend Maximum Lifetime Credit to $15K – For Every $1 Spent on College Tuition, Families Could Get $1 Off On Taxes, Up To $3K A Year

New Bill Would Also Make Families Earning Up to $200K Eligible; Current Credit Only Eligible For Families Making Less Than $180K – New York Families Save Over $1B Per Year With Tax Credit; New Version Would Provide More Savings for More Families

 

With More Than 500,000 Students Across Upstate NY, Families Would Be Able to Save More Than $1.5 Billion Per Year – Families In The Capital Region Would Eligible to Save Over $241 Million Per Year; WNY Families $247 Million; CNY $241 Million; Rochester-Finger Lakes Families $224 Million; Southern Tier Families $208 Million; Hudson Valley Families $288 Million; North Country Families $105 Million

 

Today, on a conference call with reporters, U.S. Senator Charles E. Schumer announced that he is introducing new legislation that will increase and expand eligibility for a tax credit that provides critical relief for middle class families by enabling them to offset the cost of college tuition. Schumer’s legislation, which allows families to take one dollar off their taxes for every dollar spent on tuition, would grow the savings a family can receive per student to $3,000 per year, make the credit available to families earning up to $200,000 per year, and increase eligibility by changing the lifetime limit of the credit from a number of years claimed—four years under current law—to a maximum monetary amount of $15,000. The credit, which Schumer helped pass into law in 2009, is currently only available to families earning less than $180,000 per year and only provides a tax credit of up to $2,500. Schumer said increasing this tax credit would help provide a major boost to families across Upstate New York who are dealing with the rising cost of college tuition. This tax credit has already helps New York families save over $1 billion per year, and Schumer said this increase would enable families to save even more.

 

“A college education is a necessity that is being priced as a luxury – and it is breaking the bank for students and families across Upstate New York. With tuition costs continuing to rise, middle-class families should be able to take advantage of any savings they can get. That is why I am introducing the new American Opportunity Tax Credit Permanence and Consolidation Act of 2015, which will provide real relief for families by expanding the number of people who are eligible for this higher education tax credit and increasing the size of the tax credit itself,” said Schumer. “There are more than 500,000 students enrolled in undergraduate programs across Upstate New York, and their families could be eligible for more than $1.5 billion in savings each year with the passage of this bill. It’s time we update the and grow the tax credit to better keep up with the rising cost of tuition, and make it a permanent fixture in the tax code. The difficulty of affording college tuition certainly isn’t expiring.

 

Schumer explained that the legislation he is introducing, the American Opportunity Tax Credit Permanence and Consolidation Act, or AOTC for short, could save families thousands of dollars each year by increasing and expanding the eligibility for a tax credit that provides critical relief to middle class families facing the rising cost of tuition. Schumer said this legislation, which builds upon a tax credit he initially helped pass in 2009, would take the previous AOTC one step further and enable families to offset the increasing cost of college tuition by growing the savings they can receive per student through the tax credit. Unlike a tax deduction, which reduces the amount of income subject to tax, a tax credit directly reduces taxes owed. That means for every dollar a family spends on college tuition, they could get a dollar off their taxes up to $3,000. The original AOTC tax credit is currently only available to families earning less than $180,000 per year and only provides a tax credit of up to $2,500. Schumer’s new bill would grow the savings a family can receive per student to $3,000 per year and make the credit available to families earning up to $200,000 per year.

 

First, the bill would make the AOTC a permanent part of the tax code, eliminating uncertainty that it will be extended for many families who depend on it. Second, the bill would increase eligibility by changing the lifetime limit of the credit from a number of years claimed—four years under current law—to a maximum monetary amount of $15,000. This means a family could receive up to $3,000 per year, per student for five years while students receiving less than the $3,000 per year based on their family’s tax liability, could take advantage of the credit for more than five years. Schumer said that, for students enrolled full-time, the new AOTC formula would cover 100 percent of the first $2,000 and 25 percent of the next $4,000 of qualifying expenses, for a credit of up to $3,000 per year. For students enrolled in less than half an institution’s normally required course load for a given year, the formula would cover 30 percent of the first $10,000, for a credit of up to $3,000 per year as well. Schumer said these changes recognize the fact that many students who attend school less than full-time may not finish their degrees in just four years. Changing the limit from a number of years to a maximum monetary amount, Schumer said, helps part-time students in particular, as it will no longer prevent a student from taking advantage of this full tax credit because he or she attended college for more than four years.

 

Third, the bill would expand eligibility by allowing families earning up to $200,000 per year—or $100,000 as a single-filer—to take advantage of the credit. Schumer said the original tax credit is currently only available to families earning less than $180,000—or $90,000 as a single-filer—per year. In addition, Schumer said this bill would eliminate the need for two separate college tuition tax credits by creating one bifurcated, or split, credit that applies to both full-time and part-time students. This means full-time and part-time students are eligible to receive the full credit of up to $3,000 each year.

 

Finally, Schumer explained the bill would increase the refundable portion of the credit to $1,500, which will particularly benefit low- and moderate-income students with limited tax liability. If an eligible family does not owe any federal taxes, that family could still receive a refund from the credit, of up to $1,500. The new AOTC bill would boost the value of a potential refund for an eligible family from $1,000 to $1,500 per year per student.

 

In 2011, the AOTC provided $18.2 billion in tax relief to make college more affordable. On the call, Schumer noted the number of college students in each county and the total amount that could be saved if every undergraduate student received the maximum credit. Schumer said that, according to the New York State Education Department Office of Higher Education, in 2013 there were a total of 519,046 undergraduate students attending college, both full- and part-time, across Upstate New York. Schumer said this means these families would be eligible to save an estimated $1,557,138,000 per year:

 

-          There are 80,366 undergraduate students enrolled in colleges in the Capital Region, whose families would be eligible to save over $241,098,000 per year.

-          There are 82,474 undergraduate students enrolled in colleges in Western New York, whose families would be eligible to save over an estimated $247,422,000 per year.

-          There are 80,643 undergraduate students enrolled in colleges in Central New York, whose families would be eligible to save over an estimated $241,929,000 per year.

-          There are 74,731 undergraduate students enrolled in colleges in theRochester-Finger Lakes, whose families would be eligible to save over an estimated $224,193,000 per year.

-          There are 69,498 undergraduate students enrolled in colleges in theSouthern Tier, whose families would be eligible to save over an estimated $208,494,000 per year.

-          There are 96,116 undergraduate students enrolled in colleges in theHudson Valley, whose families would be eligible to save over an estimated $288,348,000 per year.

-          There are 35,218 undergraduate students enrolled in colleges in the North Country, whose families would be eligible to save over an estimated $105,654,000 per year.

 

In addition to the income limitations, a student eligible for the current AOTC under this new legislation must be enrolled in a program leading toward a degree, certificate or other recognized post-secondary educational credential and have not been convicted of a felony drug offense.

 

Schumer has long fought to pass education tax credits and increase college affordability for middle class families struggling to keep up with rising tuition costs. The Schumer-authored college tuition tax credit was originally signed into law as part of the American Recovery and Reinvestment Act of 2009. When it was due to expire at the end of 2010, Schumer was able to include a 2-year extension of his tax credit as part of the tax package that passed the Senate in 2010. Today, Schumer announced that he is leading the charge to extend the AOTC yet again, this time on a permanent basis. Schumer has also been working to help bring down the cost of college for families and to reduce the burden of student loan on college graduates. In 2014, the Senate was able to pass a bill, at Schumer’s urging, to allow students to refinance their student loans at a much lower rate, 3.4 percent as compared to the previous 6.8 percent. Schumer continues to push his colleagues in Congress to pass this bill in the House. Schumer said this AOTC tax credit is yet another piece of puzzle for middle-class families struggling to afford the ballooning costs of college.

 

 

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