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President Obama’s Plan to Assist with College Expenses

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President Obama’s plan to assist with college expenses
Margaret Ison
Strayer University

The Obama administration is planning to propose cuts in student loan programs for millions of students and parents struggling to pay for college. The administration is also planning tax incentives to assist in managing the financial burden of student loan debt. American families are continuously trying to figure out how they are going to pay for the rising cost of higher education expenses. These expenses can be overwhelming for those who aren't prepared.

The U.S government is attempting to support those in pursuit of higher education and is sympathetic to those who are having problems managing this expense as well as those who have accumulated student loans that seem impossible to repay. In coming to the aid of taxpaying American citizens the U.S. government is offering a number of tax credits and other incentives that can provide substantial relief for many taxpayers.

Let’s first consider the various credits and deductions available to students of higher education and for their parents. The most prevalent ways of reimbursing taxpayers for higher education expenses is through tax credits. There are two main credits available, one was introduced in 2009. The American Opportunity Tax Credit, it provides a credit of up to $2,500 per student. This credit is offered for up to four years of undergraduate studies and is therefore both an improvement and an expansion on the Hope Credit which it replaced, and which was only applicable for the first two years of college (Cussen, 2010).

The American Opportunity Tax Credit has an income limitation for single taxpayers with adjusted gross incomes from $80,000-90,000 and for married taxpayers filing jointly of $160,000 and over. Individuals have the opportunity to receive up to 40% of this credit which

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