It's a Great Time to be a Student!
The American Recovery and Reinvestment Act of 2009
Known as the Economic Stimulus bill - includes some positive initiatives to support higher education. Students may see a significant increase in benefits through the new American Opportunity Tax Credit and an increase in funding for Pell Grants.
American Opportunity Tax Credit
For 2009 and 2010, the American Opportunity Tax credit replaces what we have known as the HOPE credit. With the replacement come many improvements:
· The tax credit has increased to $2,500 a year to cover higher education expenses.
· The cost of books and other course materials may be added to tuition and fees to determine your eligible
expenses.
· The American Opportunity Tax credit
is valid for the first four years of college, while the HOPE was only valid for two years. This means a potential difference of over $6,000 more returned to you.
· The income limits for eligibility are now much higher.
R
equirements for the American Opportunity Tax Credit include
· Need to be a degree or credential seeking undergraduate student.
· Need to be enrolled at least half
time (6 credit hours) for at least one term.
· Income limits for eligibility phase out at $90,000 for single or $180,000 for joint returns.
If you meet the requirements you can claim expenses for the whole year. Under this new tax credit, taxpayers will receive a credit on their tax returns based on 100% of the first $2,000 of tuition and book expenses, and 25% of the next $2,000 of tuition and book expenses paid during the tax year. Of course, you have to have an income tax liability to receive the full benefit. However, if you do not have a tax liability, you may still be able to receive up to $1,000.
Examples for Part-time Students
Tuition at UC is $258.80 per under graduate credit hour. At this rate...
· A qualifying student may take 7 credit hours per year, in essence, for free because 7 x $258.80 = $1,811.60. As long as the taxpayer has at least $1,811.60 in tax liability, they would get the full amount in credit - making their net cost for tuition for those 7 credit hours $0.00.
· For a student taking 12 credit hours
per year, their total tuition bill would be 12 x $258.80 = $3,105.60.
The total tax credit would be 100% of the first $2,000 plus 25% of $1,105.60, or $276.40. The total net
cost of tuition for the student after the tax credit would be $829.20 for the 12 credit hours.
Pell Grant
For 2009-10, the maximum Pell Grant award will increase from $4,731 to $5,350. Due to a recent change in the calculation for determining Pell Grant eligibility, students who previously were ineligible may now be able to receive a Pell Grant. Students may also be eligible to receive up to two annual Pell Grants if they choose to attend school in the summer as well as during the traditional academic year (year-round Pell Grants).
Contact Information
Vikki Van Hull
Financial Aid Advisor
605-367-5640
vikki.vanhull@SDUniversityCenter.org
