College Tuition Becoming Unaffordable

New poll shows over three-fifths of Americans believe qualified students won’t be able to attend college because of rising tuition rates; improved tax credits would help

As our students look beyond high school, many will undertake some form of higher education. A recent national poll and report released by Public Agenda and the National Center for Public Policy and Higher Education indicates widespread concern that the opportunity to go to college may not be available to all qualified students.

The report, Squeeze Play: How Parents and the Public Look at Higher Education Today, reveals that the public sees higher education as essential for success in the workplace. But tuition is rising too fast, and 62 percent agree that many qualified students will not have the opportunity to obtain a college education.

According to the national poll, the public thinks tuition increases fall most heavily on the middle class. The rich can afford higher tuition rates and the poor may qualify for financial aid. But focus groups reveal that poor Americans struggle with tuition costs more often than the middle class despite financial aid. Potential problems for poorer students include the need to work to support themselves and their families. The point is that just having financial aid is not enough.

Tuition assistance is available through federal tax credits. Two tax credits are available – the Hope Credit, worth up to $1,650 and the Lifetime Credit, worth up to $2,000. Interest on student loans is also tax deductible, and money for tuition can be saved in tax-deferred savings accounts.

The Center for Budget and Policy Priorities estimates that nearly 4 million prospective college students – or more than a fifth of all high school age children nationwide – cannot expect to receive any assistance from these credits because their families’ incomes are too low to generate sufficient income to create a tax liability for these “nonrefundable” tax credits. A family of four with an income of $24,000 would not qualify for either tax credit. Annual income would need to be over $40,000 to qualify for the full benefits of either tax credit.

At the time of this writing, it is expected that the Senate Finance Committee will be considering changes to this tax code. It is critical that these tax credits be restructured and made refundable – offering a tax refund to those with low incomes.

Contact: Kim Preston, kimp@cfra.org or 402.687.2103 x 1022 for information.

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