Study: tuition tax breaks unfair to lower-income students.
Through the Hope Scholarship and Lifetime Learning tax credits, families earning less than $32,000 annually save about $600, compared to the $900 in savings for families earning up to $59,999 and the $1,100 average credit for families earning up to $91,999.
NCES suggests that low-income families are better off with grants and other financial aid than tax credits. The family that saved $600 using the credits would save an average of $3,300 by using grants instead.
"In general, tax credits, unless they are configured as refundable, do next to nothing for low-income families," says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.
The Hope Scholarship consists of a tax credit of up to 100 percent of the first $1,000 spent on tuition and fees. A credit of up to 50 percent of the second $1,000 results in a $1,500 credit. In 2002, those eligible for the Lifetime Learning credit could take a federal income tax credit of up to 20 percent for the first $5,000 and 20 percent of the first $10,000 of tuition expenses and required fees paid out of pocket thereafter, making the maximum credits $1,000 and $2,000, respectively.
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|Title Annotation:||National Center for Education Statistics|
|Author:||Cannon, Lelita L.|
|Publication:||Diverse Issues in Higher Education|
|Article Type:||Brief article|
|Date:||Sep 21, 2006|
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