| VOL. 23, NO. 11||DECEMBER 5, 1997 |
Tax Breaks Provide Relief to Tuition Cost
BY AMY CALLAHAN
ubstantial tax relief is on the way for parents, current students and recent graduates because of several new tax laws recently passed by Congress.
For many students and their families, the savings will total thousands of dollars, according to officials in Columbia's student financial services. But these new tax laws have certain requirements, and the officials suggest that anyone with questions contact their tax advisors now, or call the IRS Office of Public Liaison at (202) 622-2970. Details are also available on the IRS web site at: http://www.irs.ustreas.gov/prod/hot/not97-60.html.
"This is very good news for our students and their families. But in order to take advantage of these new tax breaks, people must be informed," explained Kate Wilson, executive director of student financial services. "We want to make sure everyone has a heads-up, so that no one misses out."
A letter from Wilson explaining the new tax laws will accompany the spring term tuition bills being mailed this month.
Among the new tax benefits are the Hope Scholarships for undergraduates (at least half-time) in their first two years of college; a tax credit for upperclassmen, graduate students and returning students, and tax deductions on student loans for five years after graduation.
- Hope Scholarship: Technically, this is not a scholarship, but a tax credit. Students, their parents, or whoever pays the tuition bill may receive a tax credit for up to $1,500 per year in the first two years of the student's postsecondary education. This tax credit applies only to expenses paid after Dec. 31, 1997. Therefore, parents of seniors should wait until the New Year to pay the spring tuition billwhich arrives this month. Others may do the same, or could use the tax credit on the fall 1998 tuition bill. Income restrictions: Single tax filers who earn above $50,000 and joint filers above $100,000 are ineligible.
- Lifetime Learning Credit: This tax break is available to college juniors, seniors, graduate students, students returning to college and part-time students. The credit is worth up to $1,000 of tuition and fees through the year 2002, and up to $2,000 after that. It applies to tuition and fees paid after June 30, 1998. Income restrictions: Single tax filers who earn above $50,000 and joint filers above $100,000 are ineligible.
- Deduction of Student Loan Interest: By the year 2001, this tax credit will be worth $2,500 annually for interest paid on student loans. The maximum deduction in 1998 is $1,000, increasing in $500 increments each year until 2001. This deduction applies only to the first five years of interest payments due and paid after Dec. 31, 1997. Interest on existing loans is eligible, as long as it is within the five year eligibility period. Income restrictions: Ineligible are single tax filers with incomes between $40,000 and $55,000 and joint filers with incomes between $60,000 and $75,000.