As part of the deal to avoid the fiscal cliff, the expiring American Opportunity Tax Credit (AOTC) was extended through 2017. This is unfortunate for three reasons.

First, while the AOTC is too new to have an academic literature yet, its close cousins, the Hope and Lifetime Learning Tax Credits have been studied, and have been found to be ineffective. As Bridget Terry Long found

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The last couple of years, I received a nice refund check from the federal government. I was a full-time grad student for most of last year, working two jobs, and using student loans to cover my expenses. Last year, I was able to take the full $2,500 Student Loan Interest Deduction. I got an even bigger refund in 2010 because I qualified for the Lifetime Learning Credit. But the more I lContinue Reading »

In his State of the Union address in January, President Obama called on Congress to make the American Opportunity Tax Credit (AOTC) permanent, saying that his proposal would save “millions of middle-class families thousands of dollars” off of the cost of sending their kids to college. What he didn’t say was that the primary beneficiaries of his tuition tax credit program are actually much farthContinue Reading »

President Obama proposed today to permanently extend the American Opportunity Tax Credit, a partially refundable $2,500 tax credit that families with incomes up to $180,000 can claim to help offset the costs of higher education. But as I wrote in the “Student Aid Perspectives” column that ran this morning on the National Association of Student Financial Aid Administrator’s website, providing fiContinue Reading »

"Form 1040A" Copyright © Microsoft

The Treasury Inspector General for Tax Administration (TIGTA) recently uncovered in an audit that 2.1 million taxpayers may have mistakenly claimed the American Opportunity Tax Credit (AOTC), a tax credit meant to help offset the costs of higher education. The result? Approximately $3.2 billion in erroneous tax creditContinue Reading »

Jay Greene on Education Reform Books from the Past Decade: “The lack of policy influence that is attributable to recent education-reform books is not for lack of sales. Some have even become national best sellers. The problem is that policymakers and other elites are less likely to be among their readers. Instead, the buyers increasingly seem to be those actively participating in educatioContinue Reading »

Today, President Obama announced a compromise that reduces the payroll tax while also extending the Bush tax cuts for two years, among other things. That deal also extends the American Opportunity Tax Credit (AOTC), which essentially reimburses students and families for higher education costs. Without action, that credit would have expired at the end of this year.

So here’s some quContinue Reading »