In 2012, the U.S. Government Accountability Office reviewed
the extent to which taxpayers appropriately utilize the numerous tax credits and deductions related to higher education. Unsurprisingly, the GAO found that the interaction between the myriad of benefits, including the American Opportunity Tax Credit, tuition and fees deduction, Lifetime Learning Credit, and Hope Scholarship Credit, among others, often leads confusion. The result is that many students and families are not fully taking advantage of the benefits available to them. You can view the GAO report here
APLU strongly supports simplifying and consolidating higher education tax benefits in order to reduce taxpayer confusion and focus attention on those providing the maximum benefit. A number of bills in the last congress have sought to accomplish this including the Student and Family Tax Simplification Act, H.R. 3393
, offered by Representatives Dianne Black (R-TN) and Danny Davis (D-IL) and a comprehensive tax reform bill introduced by then Ways and Means Committee Chairman Dave Camp (R-MI). H.R. 1
. The American Opportunity Tax Credit Act
, introduced by Representative Lloyd Doggett (D-TX) in the 114th Congress and President Obama’s budget request for Fiscal Year 2016 also include tax proposals which would consolidate and eliminate higher education tax benefits.
While all proposals include some positive aspects with the exception of the Doggett bill, all the other proposals would eliminate the Lifetime Learning Credit (LLC) without providing a new benefit for graduate and non-traditional students who rely on the LLC for education beyond the four years in which students are eligible for the AOTC. You can view a higher education association letter of support for the American Opportunity Tax Credit Act here
APLU supports consolidation of higher education tax benefits but in a way that does not disadvantage graduate and nontraditional students who may take longer than four years to graduate.