In August, President Clinton signed the massive new balanced budget
agreement with $40 billion in education tax credits. Now the task its
to help colleges, students and parents figure out their roles in the
complex package.
The agreement includes a HOPE Scholarship with a full tax credit on
the first $1,000 of tuition and a 50-percent credit on the next $1,000,
for total aid of $1,500. The credit applies during a student’s first
two years in college. Smaller credits for upper-level study, tax
deductions for student-loan interest and tax-free treatment of prepaid
tuition programs are other elements of this package, estimated to cost
about $40 billion.
Here is a look at key questions about HOPE’s operation, based on
the legislation and guidance from White House, congressional and
association staff:
When does HOPE start?
The credit takes effect in tax year 1998 for education expenses paid
after Jan. 1. However, families and/or students will not get the actual
credits until they file 1998 tax returns, which are due April 15, 1999.
Who is eligible?
Single-parent families earning up to $40,000 a year and couplets
earning up to $80,000 a would get the full HOPE credit. Families still
would receive some help up to $50,000 a year for one-parent households
and 5100,000 for two-parent households. Higher-earning families would
receive no benefits.
