President Barack Obama urged Congress to extend an educational tax credit that is set to expire at the end of this year in order to make college more affordable, calling it “an economic imperative.”
“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 in the White House Rose Garden. “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.”
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. Obama proposed making it permanent in his budget, at a cost of $58 billion over 10 years.
Improving the U.S. education system and making college more affordable is crucial to economic growth and keeping the nation competitive in the global economy, Obama said after meeting with a group of college students and their families.
“There’s an educational arms race taking place around the world right now -- from China to Germany, to India, to South Korea,” he said.
Earlier today, the White House released a Treasury Department report on the tax breaks for education expenses that White House officials said has made college more affordable.
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.
If made permanent, a student could receive a tax credit of as much as $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.
“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 yesterday.
Obama also highlighted administration-backed changes to student loan programs and efforts to promote community colleges.
“We’re eliminating tens of billions of dollars in wasteful subsidies for banks to profit as middlemen administering student loans, and we’re using that money to make college more affordable for millions of additional students,” he said. “We’re upgrading our undervalued community colleges so we can link students looking for work with businesses that are looking to hire.”