American staff
Last week President Obama held a meeting with college students and their families on the impact of the American Opportunity Tax Credit, which was a key part of the American Recovery and Reinvestment Act.
For tax years 2009 and 2010, the new law allows families with tuition expenses to receive a tax credit of up to $2,500 per student, and up to $1,000 per year of this amount is refundable.
In Missouri alone, the credit has saved 142,000 families $249 million – an average of $1,754 per family.
“I am calling on Congress to make this tax credit permanent so it’s worth up to $10,000 for four years of college,” Obama said this afternoon during a press event in the Rose Garden at the White House.
“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.
Obama also discussed a new report by the U.S. Treasury Department “showing what a difference these college tuition tax credits are making.”
The Treasury report found that the American Opportunity Tax Credit increased overall tax benefits for higher education expenses by more than 90 percent, helping 12.5 million students and their families pay for college in 2009.
Recipients received an average tax credit of more than $1,700, which is an increase of about 75 percent over the average Hope Credit or Lifetime Learning Credit recipient in 2008. The report also found that since the credit is refundable, 4.5 million students and families received a tax refund from the AOTC in 2009 with an average value of $800, which they would not have been eligible for in 2008.
Treasury Secretary Tim Geithner said, “The American Opportunity Tax Credit has significantly reduced the price tag on higher education for millions of middle class families and will pay dividends for our country in higher growth and incomes.”