New College Tax Credit Legislation Would Streamline Process, but Offer Little Aid to Students

September 5, 2007

New bills in Congress would expand federal subsidies to higher education in a way that would likely help students little financially but would straighten out the current maze of federal subsidies, according to a new legislative analysis by the Tax Foundation.

“Any parent knows putting a child through college is a complicated and costly venture,” said Gerald Prante, the study’s author. “New legislation to simplify the college tax credits should get an ‘A’ for helping make the process a bit simpler. Sadly, however, that simplification won’t mean dramatically more relief for students.”

In the new study, part of the Tax Foundation’s Fiscal Fact series, Prante argues that the Emanuel-Camp-Bayh legislation does the most good by consolidating the three current tax provisions students and families can qualify for into one unified credit. The legislation would also bump the yearly tax relief cap up to $3,000 from the present $2,000 level. Prante notes, however, that this increase could be whittled away by colleges that chose to simply increase tuition in response to the increased tax relief offered to families.

Read the full study. Read the news release.


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