The President just finished meeting with a group of college students and their families in the Oval Office. They discussed the American Opportunity Tax Credit (AOTC), which is worth up to $2,500 a year for four years and covers tuition, fees and textbook expenses. This credit was created by the Recovery Act but it is scheduled to expire at the end of this year. Today, President Obama called on Congress to permanently extend the AOTC. Why is this so important? Check out this Department of the Treasury report that was released today.
The report finds that more than 12.5 million students and their families benefited from a tax incentive for higher education last year, including over 8 million students who received the AOTC. They got an average tax credit of $1,700, which is about 75% more than the average recipient of college tax credits received in 2008, before our Administration established the AOTC. The AOTC replaced and expanded the Hope Scholarship credit, which had a lower maximum benefit, was only available for two years, and could not be used to cover the cost of textbooks and other course materials. Because of the AOTC, higher education tax incentives increased by 90% between 2008 and 2009 – that translates into $8.7 billion in the pockets of middle class families.
Making college more affordable is a core priority of the Middle Class Task Force and we highlighted the importance of permanently extending the AOTC in our Annual Report. We hope that Congress will heed the President’s call to action.
Brian Levine is Deputy Domestic Policy Advisor to the Vice President