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Helping With the Costs of College |
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Articles Only Online
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Written by Congressman Brad Sherman
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Monday, 08 June 2009 11:09 |
On February 17th, President Obama signed the American Recovery and Reinvestment Act (also known as the Economic Stimulus Bill) into law. I voted for this legislation.
The Economic Stimulus Bill has important provisions to help families deal with college costs. In particular, if you are thinking about financing a college education, you should be aware of provisions concerning Pell Grants and the American Opportunity Tax Credit.Pell Grants The Economic Stimulus Bill increases the maximum Pell Grant to $5,350 for the 2009-2010 school year and to $5,550 for the 2010-2011 school year. The Pell Grant program is the largest source of federal aid granted to post-high school students by the federal government. Pell Grants are available to low-income, undergraduate students to help offset the costs associated with obtaining a college or trade school education. American Opportunity Tax Credit For 2009 and 2010, the Bill will also provide taxpayers with a new "American Opportunity" tax credit of up to $2,500 of the cost of tuition and related school expenses paid during the year. This credit replaces the Hope Scholarship Tax Credit for the next two years. Under the new American Opportunity Tax Credit, taxpayers will receive a tax credit based on 100% of the first $2,000 of tuition and related expenses (including books and lab equipment) paid during the taxable year and 25% of the next $2,000 of tuition and related expenses paid during the taxable year. Under the previous Hope Scholarship tax credit, only tuition was eligible. Due to the fact that tuition at the Valley’s community colleges (Pierce, Mission, and L.A. Valley College) is less than $1,000, many Valley students were not able to fully take advantage of the Hope Scholarship. I worked hard so that the now-applicable American Opportunity Tax Credit, will also include the cost of required books and lab equipment, thus providing community college students with a greater credit. I am now working to try to include student health fees and transportation costs, but currently these do not yet count as eligible expenses. If the student is claimed as a dependent on the parents’ tax return, then the parents claim the credit on their tax return. If the parents are divorced or separated, whichever parent claims the student as a dependent is the one that can claim the credit. If the student is not claimed as a dependant by either parent, then the student can claim the credit on the student’s tax return. If the person claiming the credit (whether it is the student or the parent) has an adjusted gross income in excess of $160,000 for married couples ($80,000 for someone who is single), then the amount of the credit is reduced. Congressman Brad Sherman represents the San Fernando Valley. He is certified public accountant and a senior member of the House Financial Services Committee.
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