Create a New $4,000 American Opportunity Tax Credit to Offset College Costs

Promise Hedged President Obama hedged on the following promise:

"I'll create a new and refundable tax credit worth $4,000 for tuition and fees every year." — 11/7/07, Bettendorf, Iowa

"Will make college affordable for all Americans by creating a new American Opportunity Tax Credit. This universal and fully refundable credit will ensure that the first $4,000 of a college education is completely free for most Americans, and will cover two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students. Recipients of the credit will be required to conduct 100 hours of community service." — Obama education plan

Source: http://origin.barackobama.com/issues/education/

Other promises regarding education and Taxes.

UPDATES:

Updated: February 17, 2009

Tax credit for college not as much as Obama promised

Congress granted additional tax benefits for students in the American Recovery and Reinvestment Act of 2009 it approved Feb. 13, 2009. Congress even gave the program the name Obama used during the campaign: the "American Opportunity Tax Credit." But it falls short of what Obama promised on the trail,which was a $4,000 a year tax credit for college students.

The credit had been $1,800 under existing law and will now go to $2,500 thanks to the stimulus. But that's still well below the $4,000 Obama promised.

(For accountants and tax geeks: That $2,500 includes a full credit on the first $2,000 of expenses, and then 25 percent of expenses up to $4,000, for a total potential credit of $2,500.)

The measure also does not require community service as specified in Obama's original promise, but it does direct the education secretary and the treasury secretary to conduct a feasibility study on requiring community service in order to get the tax credit.

It should also be noted that the stimulus bill, which Obama signed on Feb. 17, only approves the new credit for two years. If Obama wants the tax cut to continue beyond those years, he will have to include it in future budget legislation. It's possible that at that time Obama could succeed in increasing it to the higher levels he promised during the campaign.

Sources:

Library of Congress, The American Recovery and Reinvestment Act of 2009, accessed Feb. 17, 2009

The Tax Policy Center, report card on the American Recovery and Reinvestment Act of 2009, accessed Feb. 17, 2009


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