By Glenda Oviedo
College tuition fees and education costs are critical elements to weigh when considering the value of a college degree. While going to college represents better professional opportunities, it’s almost certain to increase the chances of being in debt for years.
Until 2009, the maximum Pell Grant for the 2008-2009 award year was $4,731, but after President Obama increased the funding for Pell Grants, the maximum amount now is $5,550 for the 2010-2011 award year.
However, the rising costs of education require an action greater than an increase in financial aid. Students are concerned about not only paying university fees and course materials, but also supporting themselves and helping their families.
Until now, the Hope Scholarship Credit was created to address those concerns. It wasn’t long before it became apparent that something else was needed to help students with rising college costs.
It is called the American Opportunity Tax Credit (AOTC) and it enhances the benefits of the Hope Scholarship Credit. For example, the AOTC enables more students to receive a tax credit of up to $2,500 each year for up to four years of college, whereas the Hope Credit is available for only two years.
President Obama signed the initiative into law in February 2009 as part of the American Recovery and Reinvestment Act. It replaces the Hope Scholarship Credit for 2009-2010 tax years. It is proposed to become permanent in the President’s FY 2011 Budget.
The U.S. Department of the Treasury stated that the main difference between the AOTC and Hope Scholarship Credit is that “the Hope Credit allowed $1800 per year, non-refundable and now it is of $2500 per year and is partially refundable up to 40 percent.”
The American Opportunity Tax Credit also includes textbook costs and course materials, not covered before by the Hope credit. Finally, AOTC comprises a higher income range from between $100,000 and $120,000 for married couples filing joint returns to $160,000 and $180,000 for married couples completing joint returns.
To reinforce the importance of the AOTC, the Treasury Department issued a new report highlighting the benefits of this tax credit for students and their families.
The report reveals that “the AOTC increased overall tax benefits for college expenses by more than 90 percent, helping 12.5 million students and their families pay for college in 2009.”
The report also shows that beneficiaries of the AOTC obtained an “average tax credit of more than $1700 and 4.5 million students and families received a tax refund from the AOTC in 2009 with an average value of $800.”
“I have a degree”
Yet, some students do not consider the new tax credits to represent significant help, when they have student loans to pay off and must spend the money from their tax returns covering basic necessities.
Ana Aranibar, senior student of Early Childhood Education at Florida International University (FIU), believes that a tax credit is not enough and a new financial policy for higher education is needed.
She had to leave college for two semesters because costs became too prohibitive. She returned to school with the help of a grant and a student loan because financial aid was not sufficient to pay her tuition fees. For Aranibar, being constantly worried about money is an issue that she finds affects a student’s academic performance.
“There must be some help available to cover basic needs,” said Aranibar. “Because if that is not covered, the academic performance is not the same.”
Several students have to get second jobs or use their credit cards to pay for college. Jose Penso, a FIU graduate student, as well as, a business professor at Ana G. Mendez University, is one of them.
Penso decided to go for a Masters in Communications for a career change because he wanted to gain more knowledge in a field that he really likes. Even though he has a busy schedule, he takes a few classes per semester because he considers education opens doors for personal and professional development.
He believes initiatives such as the American Opportunity Tax Credit effectively helps students, but programs like the tuition reimbursement could assist students even more. Penso believes that the government could offer more tax incentives to those companies that offer their employees a tuition refund.
For Ever Cruz, a student of the Global Strategic Communications Masters program at Florida International University, a tax credit is a relief for students who pay their own way through college.
“Getting higher education is an investment worth it to pay because it is a personal accomplishment,” said Cruz. “After all, I have a degree.”
Glenda Oviedo is an editor-intern with Latina Lista. She is a graduate student at Florida International University (FIU) and is working towards a Master’s degree in Global Strategic Communications.