Bill to Extend Help for College Students Introduced
Barring action from Congress, the partially refundable American Opportunity Tax Credit (AOTC) will expire at the end of 2012 and revert to the nonrefundable Hope Credit. The White House estimates 11 million families would face an average tax increase of $1,100 for each student who would have been eligible for the AOTC in 2013 if this happens.
At a time when our economy depends on growing our pool of highly-skilled and well-educated labor, we cannot prevent low-income students from getting ahead and accessing opportunities to attain a college degree. We shouldn’t risk decreasing their ability to pay for their education.
Fortunately, a bill – H.R. 6179 – has been introduced in the U.S. House of Representatives to extend the AOTC for another year, delaying its expiration until Dec. 31, 2013.
Of course, this is only a temporary fix and is certainly not the only solution to support low- and moderate-income students through the tax code. But it’s an important piece of a bigger puzzle. The votes taking place now in both the Senate and the House of Representatives to determine what should be done with the multitude of expiring tax provisions are only a foreshadow of the tax debates that lie ahead.
Tax reform could be on the horizon, and we should take the opportunity to develop longer-lasting solutions and avoid future threats to the support of the AOTC and other improvements to tax credits for working families. When these debates do commence, alternatives that would improve upon the current AOTC should be considered, including policies to better target and simplify the multiple higher education credits available into a single, refundable higher education tax credit for low- and moderate-income students and families, a concept previously proposed by NCTC.
Until a more supportive, permanent solution can be enacted, the AOTC cannot be permitted to expire. We strongly encourage our members and affiliates to make sure that your Representatives and Senators support an extension of the AOTC as part any effort to address the expiration of tax provisions this year. Now is not the time to abandon a major support that is essential to making college affordable for millions of households.
Rep. Lloyd Doggett of Texas, chief sponsor of H.R. 6179, sums up this sentiment best: “With the enactment of the AOTC we have made strides in the right direction over the past three years by making one of largest investments in college aid in our history. We cannot afford to decrease our investment in education or increase taxes on hard working American families that are looking to get ahead.”
By Holden Weisman, Policy Analyst