Summary of President Obama's Budget Blueprint for Federal Student Aid
January 30, 2012
American Opportunity Tax Credit (AOTC)
Who: More than 9 million mostly undergraduate students benefit from the American Opportunity Tax Credit each year.
What: The American Opportunity Tax Credit is a modification of the Hope Scholarship Tax Credit. It increases the amount of the Hope Scholarship tax credit from $1,800 to $2,500, extends it from 2 years of postsecondary education to 4 years, makes the tax credit partially refundable and raises the income phaseouts.
When: The American Opportunity Tax Credit expires at the end of 2012 if not extended by Congress. President Obama is calling on Congress to make the American Opportunity Tax Credit permanent.
Impact: The cost to the federal government from this tax expenditure is approximately $3 billion to $4 billion per year.
Background: The American Opportunity Tax Credit was enacted as part of the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). It was initially available for the 2009 and 2010 tax years. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (P.L. 111-312) extended the tax credit for the 2011 and 2012 tax years.
Helping Consumers Make Informed Decisions about College Costs and Quality
What: The College Scorecard will provide families with “essential information about college costs, graduation rates and potential earnings,” according to a White House fact sheet. The Financial Aid Shopping Sheet will help families make informed decisions concerning college affordability by providing clear, correct and comparable disclosures of college costs and financial aid. President Obama is also proposing to collect earnings and employment information for colleges to help create the College Scorecard. (This may also be a step toward extending the gainful employment regulations, which are essentially affordable debt restrictions, to all colleges, not just for-profit colleges.)
Background: The Higher Education Opportunity Act of 2008 (P.L. 110-315) required the US Department of Education to develop a model financial aid offer form as a voluntary standard for colleges and universities. The US Department of Education and Consumer Financial Proection Bureau released a draft Financial Aid Shopping Sheet as part of the Know Before You Owe: Student Loans project in October 2011. The Consumer Financial Protection Bureau received more than 20,000 comments on the draft, mostly positive. President Obama is proposing to make an updated version of this draft a required standard for colleges and universities.