President Barack Obama today will highlight a Treasury Department report on a tax break for education expenses that the administration says has made college more affordable.
The American Opportunity Tax Credit, which allows families to receive a credit of as much as $2,500 per student, was part of last year’s economic stimulus legislation and will expire at the end of the year. Obama proposed making it permanent in his budget, at a cost of $58 billion over 10 years.
“Our hope is to get this extended in a way that’s practical and timely,” Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, said in a briefing for reporters. “But we are not going to, at this moment, try to prejudge the congressional strategy on doing so.”
Administration officials said the tax credit, which replaced the Hope Scholarship credit, is part of a White House effort to boost the U.S. education system and increase the number of students graduating from college. Obama has said raising the graduation rate is crucial to future U.S. economic growth.
If made permanent, a student could receive a tax credit of up to $10,000 over four years, according to the Treasury report. The credit is phased out for married couples with more than $160,000 in annual income.
“We think it sends a very important signal,” Sperling said. “Whether we’re in good times or tough times, we don’t ever want to discourage families from investing in their children’s future and our economic future.”
Obama will meet with local college students today to explain the impact of extending the tax credit.
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