In November College Affordability Solutions urged you contact your members of the U.S. House and Senate in opposition to certain provisions within the House tax bill that was then working its way through Congress.
That bill was supposedly designed to cut taxes. But it would have done away with deductions and exemptions that reduce taxes for you and other students and parents by over $18 billion a year — money that helps pay college costs.
The original House bill was remarkably partisan. It was written by Republican House members without input from Democrats, and it got 227 Republican votes but no Democratic votes
Fortunately, the Senate also opposed eliminating college-related tax deductions, exclusions, and exemptions. It made sure they remained unchanged in the final bill, which is now law. So don’t ever think your voice doesn’t matter — constituent pressure clearly helped preserve these tax breaks!
Here are the college tax benefits that were preserved in the final bill:
- If you’re a student, you still won’t be taxed on money you use from your College Savings Bonds to pay your educational expenses.
- Parents, you may keep on making deposits into your Coverdell Education Saving Accounts to build up money for college.
- The first $5,250 you use from your Employer-Provided Educational Assistance program to pay higher education costs will continue to be untaxed.
- The Lifetime Learning Tax Credit remains unchanged. So you may keep reducing what you’ll pay in federal income taxes by up to $2,000 a year based on what you spend on tuition, required fees, books, and supplies for any student (including you) taking courses to get a degree or improve job skills.
- The Scholarship and Fellowship Exclusion will continue to omit from federal taxation what your scholarships and fellowships pay toward your college costs.
- Borrowers, you’ll still be able to claim your Student Loan Interest Deduction of up to $2,500 for student and/or parent loan interest you pay each year.
- Your $4,000 per year Tuition and Fee Deduction remains unchanged.
- Are you or will you be a graduate student? If so, any Tuition Reduction you receive in connection with a graduate assistantship or fellowship still won’t be subject to taxation.
Congratulations on keeping these benefits! But stay active and alert. More bills impacting college affordability will come before Congress soon.