Is your family struggling to pay for your education? Well, it might get even harder. The American Opportunity Tax Credit, created as part of the American Recovery and Reinvestment Act of 2009—also known as the stimulus package—is set to expire at the end of the year. Unless Congress acts, the average American family, and the average Columbia student, will pay an additional $1,700 per year in tuition.
The AOTC expanded the pre-existing Hope Credit so that it would assist families in higher- and lower-income brackets that were not previously eligible. The tax credit helps students by paying for two-thirds of their tuition costs at a four-year public college and by essentially paying the costs of a community college education. If the credit disappears, the attainability of a college education for many Americans may slip away.
With the AOTC, a taxpayer with an income of less than $80,000, or $160,000 for joint filers, who pays a student’s tuition is eligible for $2,500 each year for up to four years of college. Those with higher incomes are eligible for a reduced credit. Even those who do not owe taxes can benefit from the credit—it is partially refundable, allowing a low-income family to receive up to $1,000 to put toward post-secondary education.
Compared to the Hope Credit, the AOTC assists more students and is worth up to $700 more per student. It can also be claimed for the first four years of post-secondary education (up from two years under the Hope Credit), and it can be put toward expenses other than tuition, including textbooks and other fees.
In the face of economic strain as well as rising college tuition costs, families are finding it harder and harder to pay for college. This tax credit makes a significant impact. Just look at the statistics. The Treasury Department reports that 8.3 million people used the tax credit last year, averaging about $1,700 per college student.
The cost of attending Barnard or Columbia, including tuition, room and board, and additional fees, is upwards of $56,000 per year, totaling $224,000 for all four years. According to both schools’ financial aid offices, about 50 percent of Barnard and Columbia College students receive financial aid. For a large portion of our community, this assistance is the difference in making college a possibility. Even the colleges themselves have a hard time paying tuition—financial aid offices often don’t have enough to cover students’ needs, leaving many families with a bigger bill than they can afford. In addition, the majority of undergraduate financial aid packages provide a large portion of their assistance in the form of student loans. While loans are helpful in allowing students to attend school, this deferred payment method is still exorbitant and places a great deal of strain on students’ finances well after college.
In recent weeks, President Barack Obama has called upon Congress to make the AOTC permanent, making college affordable for more Americans. And, to no one’s surprise, Republicans in Congress are pushing back. They plan to cut educational funding by 20 percent, and it is unclear whether the credit will survive.
In discussing the AOTC, Obama has said that he hopes to create a level playing field where “every child in this country has a chance to rise above any barriers of race or faith or station, and they can fulfill their God-given potential; where the American Dream is a living reality.” He added, “By opening the doors of college to anyone who wants to go, that’s a future we can help build together.” Paying for education is a long-term investment in the future of this country—the AOTC is the government’s investment in us.
Though our country has historically emphasized the ability to rise to the top through hard work, it is important to note that the low-hanging fruit of the past is no longer a reality in the present.
If the government fails to extend the AOTC, it will deny millions of American students access to college by withholding the much-needed assistance to pay for it. Under the economic constraints of today’s world, hard work and motivation often prove insufficient. This tax credit is too important to the success of the American people for it to be taken away. It’s up to our leaders to decide whether they are ready to make education accessible to all Americans.
Alexandra Katz is a Barnard College senior majoring in political science. Umm, Excuse me runs alternate Tuesdays.