Families may have the opportunity to take advantage of a tax credit which was extended to help with college costs as the American Opportunity Tax Credit continues to offer this form of aid in 2011 and may allow families who meet tuition expenses to receive a tax credit of up to $2500 each year for four years. Obviously, this assistance for families who are trying to meet the costs of college can be helpful if parents must pay tuition and fees out-of-pocket, either due to their inability to qualify for financial aid or the for those who want to avoid debt associated with student loans.
The Treasury Department published a press release providing more information about this tax credit for college tuition and it’s believed that the average tax credit in 2011 will cover around 70% to 80% of tuition and fees at a two-year institution and 25% to 30% of tuition and fees at a four year institution. While private institutions have typically been notoriously high in cost, there are reports that public institutions have also begun to increase tuition and fees which students must meet, and this has necessitated the need for more assistance in order for incoming students to meet all of these costs.
Obviously, the simple use of the American Opportunity Tax Credit will not be overly beneficial for a family who is attempting to lower the overall college costs they must pay out of pocket, but when used jointly with scholarships, grants, or if they are necessary, student loans, a tax credit for qualifying families can drastically improve the financial situation that a family faces concerning meeting these tuition costs. Obviously, simply paying college tuition is not all that is associated with attending a college or university, as fees, living expenses, food and books are also expenses that must be met.
However, it’s hoped that with this tax credit available to more families through 2011, at least some of the burden which these college students and their families must face will be lessened and it could provide more options for individuals to attend a university when they were concerned about finances and the ability to meet these costs. Yet, financial aid counselors often suggest that students heavily research their scholarship and grant opportunities as free forms of financial assistance are one of the best tools a student can access when it comes to paying for their education.
Understandably, the students may not always have access to scholarships or grants, but federal grants for need-based students and scholarships which come in a variety of categories from general college students to those in specific degree program areas are available and information can be gained through either one’s college financial aid office or by simply running a Google search. Many students wish to avoid loans as well, and this tax credit may help to reduce the need for student borrowing, but there are options from private and federal student loans which can also meet any additional costs that are not covered under scholarships, grants, or assistance from this tax credit.