Obama calls for extending tax break for college students
Wednesday, October 13, 2010; 5:06 PM
President Obama called Wednesday on Congress to extend a tax break for students included in last year's economic stimulus package, arguing that the policy provides more generous assistance to middle-class families struggling with the skyrocketing cost of college tuition.
At a Rose Garden news conference, Obama was joined by three families that have taken advantage of the credit, known as the American Opportunity Tax Credit, including a single mother from New Jersey who is putting the last of four children through college.
"At a time when the unemployment rate for folks who've never gone to college is almost double what it is for those who have gone to college, when most of the new jobs being created will require some higher education, when countries that out-educate us today will out-compete us tomorrow, offering our children a world-class education isn't just a moral obligation, it's an economic imperative," Obama said.
He urged lawmakers to make the tax credit permanent "because we've got to make sure that in good times or bad, our families can invest in their children's future and in the future of our country."
The credit provides as much as $2,500 a year per student to cover expenses ranging from tuition payments to other expenses, such as books and supplies. According to a new report by the Treasury Department, the credit has significantly expanded aid to the 12.5 million students who took advantage of it last year, raising their annual benefit to an average of $1,736 - a 75 percent increase over the Hope Credit and Lifetime Learning Credit, two earlier federal tuition-assistance programs.
The tax credit is also more broadly available than those programs, which were limited to expenses incurred during the first two years of college and did not cover a four-year education. The new credit also goes further up the income scale, with families earning as much as $180,000 a year eligible to apply.
Mary Ellen O'Mealia, a client service associate for a New Jersey financial services firm, said the credit offered critical support as her eldest son, Sean, graduated from William and Mary in 2009, her daughter Kelly graduated from Fairfield University this spring; and her twins, Tom and Leigh Anne, started college at Emory and St. Lawrence, respectively, this fall.
All four children worked to help pay for their educations, and O'Mealia dumped in a college savings account the bulk of the insurance payment when her husband died 10 years ago. But with a salary of less than $50,000 a year, O'Mealia said making tuition payments has been a challenge.
"I have difficulty with other parts of the stimulus package. I am, however a huge advocate of this," she said in an interview outside the White House. "I wish more people could take advantage of it."
With the credit scheduled to expire in January, congressional leaders have shown little interest in covering the $58 billion cost of extending it over the next decade. To fund the credit, administration officials are urging lawmakers to choose from a variety of new taxes on business and the wealthy that were proposed in Obama's budget request but never enacted.
Still, at a time when a college degree is a critical steppingstone to financial success, administration officials said they are hopeful that the credit could become part of the legislative discussion when Congress returns to Washington after the Nov. 2 midterm elections.
"What the president wants to express is the importance of continuing this tax cut and sending that important signal of support for families seeking to send their children to four years of college," said Gene Sperling, special counselor to Treasury Secretary Timothy F. Geithner. "Our hope is to get this extended in a way that's practical and timely, but we're not going to try to prejudge the congressional strategy for doing so."