The U.S. House of Representatives passed an economic stimulus bill Wednesday, part of which would increase funding for the Hope Tax Credit, making nearly 4 million low- to middle-income students eligible for a tax break.
Chye-Ching Huang, a research fellow in the federal fiscal policy team at the Center on Budget and Policy Priorities, said the package will make college more affordable for students.
According to Huang, the bill would increase the tuition tax credit from $1,800 to $2,300.
Huang added a family of four with two college-aged students would need to earn more than $26,000 per year to receive partial credit and over $43,000 to receive full credit from the old law.
On many occasions, low-income students who did qualify for a fraction of the old Hope Credit did not take advantage of the tax break because they were still unable to afford necessities such as room and board that the nonrefundable tax break did not address, according to Huang.
“I think in the short run, helping students stay in college will help state governments through the hard pressed fiscal economic mess and keep college affordable,” Rep. Spencer Black, D-Madison, said. “In the long run our economy will depend on an educated work force.”
Black added the number of provisions arranged to make college more affordable are especially important in conjunction with state budget cuts and an overall decrease in endowments.
“University endowments have been hit hard by financial crisis, and a lot of public universities have cut funding, and a lot of them are imposing tuition increases because of the state budget problem,” Huang said. “So by upping their fees more and more students are ill-equipped to go to school.”
According to Huang, making the bill partially refundable should directly support some of those students in need.
“Making the bill refundable targets low- and medium-income families, and those are the families that are more willing to take advantage of the resources that they receive,” Huang said. “They are the types of families that may not have gotten an education in absence of the credit.”
The provision is also working to make tax credit available for four years instead of just two.
Rep. Robin Vos, R-Racine, an opponent of the bill, said the stimulus package is nothing more than a bill that creates government jobs as opposed to jobs for a family-supporting private sector.
Vos added not paying income taxes and getting a check from the government is nothing more than welfare. He proposed giving tax rebates to people who are actually paying taxes and not people already receiving government handouts.
“I hope after we spend this money we have a lot to show for it as opposed to a bunch of press releases and IOUs that our grandchildren are going to pay for,” Vos said.
