The House Ways and Means Subcommittee on Select Revenue Measures held a hearing to discuss tax incentives for post-secondary education.
Some of the educational tax incentives include the Hope Credit, Lifetime Learning Credit, and deductions of tuition fees and student loan interest. Other benefits, including Coverdell education savings accounts, Section 529 college savings plans, U.S. education savings bonds, federally guaranteed student loans and Pell grants add to the complexity. However, taxpayers must decide which benefits provide the greatest tax savings without violating any rules against double dipping.
"With more than 10 million families claiming tax benefits to help finance higher education each year, Congress must ensure that these benefits work as intended," said subcommittee Chairman Richard E. Neal, D-Mass., in a statement.
Deputy assistant secretary for tax policy Karen Gilbreath Sowell testified about the multiplicity of incentives. "The education tax incentives under current law are numerous, often overlapping and complex," she said in her written testimony. "The incentives vary in terms of who may receive benefits, which expenses may be covered, and how large an exclusion, deduction or credit may be allowed." Adding to the complexity is the fact that the most beneficial approach may not be apparent until the end of the tax year, which may be months after a student's tuition is due, she added.
Debra M. Townsley (pictured), president of Nichols College in Dudley, Mass., highlighted two recently expired tax incentives: the tuition deduction and the IRA charitable rollover. "While we don't collect specific information on how many of our students have claimed the [tuition] deduction in the past, I can tell you that the expiration of the deduction in December of 2007 has caused great concern among students and their parents that this important benefit will no longer be available, since it has not yet been renewed," she said.
She urged the subcommittee and full committee to extend the tuition deduction. Townsley also asked for action on renewing the IRA charitable rollover. "Just a month ago, I received a call from a trustee asking if he could use an IRA rollover to endow a scholarship at Nichols," she said. "I had to tell him not right now, but hopefully Congress will act in time to renew that incentive. This is private money that helps colleges and universities with scarce resources and rising costs."
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