We cannot underestimate the impact of the American Opportunity Tax Credit on 9.4 million students nationwide. This tax credit will make college more affordable for our future business leaders, scientists and teachers and help families struggling with rising tuition bills and growing student loans.
—Secretary of Education Arne Duncan
Expanded tuition tax credits for working class families, larger Pell Grants for low-income students, and making student loans more affordable for all college graduates were on the docket today as U.S. Secretary of Education Arne Duncan joined U.S. Secretary of the Treasury Tim Geithner, D.C.’s Wilson High School Assistant Principal Charlette Butler, nearly 50 Wilson seniors, their teachers, parents and community leaders at the University of the District of Columbia for a town-hall style forum on the Administration’s efforts to ensure all Americans reach their college dreams. (See photos.) Wilson High School, the District’s largest comprehensive high school and boasting an impressive 90% college-going rate among graduates, is currently housed on the UDC campus while a $100 million renovation is being completed at the high school campus.
The town hall forum commenced with Secretaries Duncan and Geithner extolling the benefits of the recently extended and enhanced American Opportunity Tax Credit (AOTC). The credit, initially created under the American Recovery and Reinvestment Act and extended through 2012 as part of the Tax Relief, Unemployment Reauthorization and Job Creation Act of 2010, provides families with college tuition expenses the opportunity to claim a tax credit of up to $2,500 each year for up to four years per student. For students claiming the maximum credit for these four years, the AOTC will provide up to $10,000 to help pay for the cost of college.
The credit equals 100 percent of the first $2,000 of expenses, and 25 percent of remaining expenses, up to a total credit of $2,500. The maximum available credit for 2011 would cover about 80 percent of tuition and fees at the average two-year public institution, or about a third of tuition and fees at the average four-year public institution. In addition, the AOTC is partially refundable, meaning that low-income families with no federal income tax liability can receive up to a $1,000 tax refund to help defray college expenses.
Secretary Geithner unveiled a new Treasury Department analysis showing that 9.4 million families with college students across the nation will benefit from over $18.2 billion in tax relief to help make college more affordable and accessible in 2011. He further noted that in the District of Columbia, the Wilson Class of 2011 and nearly 16,000 families of enrolled college students across the city will be eligible to file for the tax credit this year. For parents and students struggling to pay college tuition and fees or budgeting for future student loan debt, this partially-refundable tax credit will make a positive difference in their lives.
Wilson students and parents inquired about the range of federal initiatives to assist low-income families with the rising costs of college and engaged the Secretaries on the Administration’s historic increases in the Pell Grants program as well as access to Federally subsidized student loans and college work-study programs; discussed actions taken to simplify and streamline the FAFSA form and federal financial aid process and pressed the Secretaries for opinions on the future passage of college access legislation for immigrant families like the DREAM Act. Angela Benjamin, a physics teacher at Wilson, and feted at the forum by Secretary Duncan for her recent designation as one of the seven most effective teachers in DC Public Schools, asked about the benefits of the recently expanded income-based repayment program (IBR) and whether its existing loan forgiveness provisions for teachers would be “grandfathered in” for experienced educators like herself. To the delight of the crowd, Duncan replied, “Angela, me and you lose on this one”.
However, for millions of America’s future college graduates and our nation’s future public servants, IBR will make a huge difference in their personal finances and ability to afford their student loan payments. Under IBR, borrowers who assume loans after July 1, 2014 will be able to cap their student loan repayments at 10 percent of their discretionary income. If they make their payments, all borrowers will have loan balances forgiven after 20 years. Teachers, nurses and other public servants will have any remaining student loan debt forgiven after 10 years.
To read more about what Secretary Duncan and Geithner wrote about today’s visit and the benefits of AOTC, see their blog post.
Click here for an accessible version of the video.
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