Obama's financial position includes tax credits that may alleviate student debt
The rising cost of college education has become an increasingly important issue in recent years. During the course of this year's presidential campaign, both John McCain and Barack Obama discussed education policy. Both sought to reign in the cost to families of higher education.
President-elect Obama has put forth a number of education policies as goals for his administration. The largest and most contentious part of his program is the introduction of an American Opportunity Tax Credit, which would provide a full refundable tax credit of $4,000 and require students receiving the tax credit to engage in 100 hours of community service each year.
The Obama campaign estimated that this tax credit would cover two-thirds of tuition costs at the average public university. The campaign also claims that by making the tax credit fully refundable, it is helping low-income families. A fully refundable tax credit is one in which, even if a taxpayer is liable for less than the value of the tax credit, the government will still pay them the difference.
Some financial aid experts, however, argue that this will primarily benefit middle-income families. This is due to the timing of the reimbursements. A tax credit benefits families some time after they have to pay for tuition, meaning that it favors those who can afford to wait.
There is also some concern that, given the current economic climate, the government couldn't afford to institute a tax credit like this. It is estimated that this program would cost $10 billion.
Evan Lazerowitz, president of the Hopkins College Republicans, argued that this linkage of a tax credit and community service is problematic.
"We're not opposed to a tax credit ... [but] linking it to community service creates a number of externalities," he said. "Community service, rather than being a voluntary activity, becomes a chore for students. Students who would be working for pocket money are now spending time in this program."
President-elect Obama has put forth a number of education policies as goals for his administration. The largest and most contentious part of his program is the introduction of an American Opportunity Tax Credit, which would provide a full refundable tax credit of $4,000 and require students receiving the tax credit to engage in 100 hours of community service each year.
The Obama campaign estimated that this tax credit would cover two-thirds of tuition costs at the average public university. The campaign also claims that by making the tax credit fully refundable, it is helping low-income families. A fully refundable tax credit is one in which, even if a taxpayer is liable for less than the value of the tax credit, the government will still pay them the difference.
Some financial aid experts, however, argue that this will primarily benefit middle-income families. This is due to the timing of the reimbursements. A tax credit benefits families some time after they have to pay for tuition, meaning that it favors those who can afford to wait.
There is also some concern that, given the current economic climate, the government couldn't afford to institute a tax credit like this. It is estimated that this program would cost $10 billion.
Evan Lazerowitz, president of the Hopkins College Republicans, argued that this linkage of a tax credit and community service is problematic.
"We're not opposed to a tax credit ... [but] linking it to community service creates a number of externalities," he said. "Community service, rather than being a voluntary activity, becomes a chore for students. Students who would be working for pocket money are now spending time in this program."
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Maria Ostridge
posted 3/11/09 @ 4:04 AM EST
I thought this debate was about them, as opposed to featuring them. Whoops.
Maria Schellden
posted 3/15/09 @ 2:40 AM EST
Good and interesting article, thanks!
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