New Schumer/Menendez Study Reveals College Tuition Skyrocketed 22 Percent in NY and 31 Percent in NJ Since 2000

New Schumer/Menendez Study Reveals College Tuition Skyrocketed 22 Percent In NY And 31 Percent In NJ Since 2000

College Tuition Tax Deduction, Which Annually Allows More than 350,000 NY and NJ Families To Deduct Thousands of Dollars in College Costs, Expired This Year

Congressional Leaders Chose Tax Breaks for Big Oil Companies over Extending College Tax Breaks for Middle Class Families

Schumer and Menendez Announce Fight to Restore Critical Tax Break in Upcoming Lame Duck Session

Today, U.S. Senators Charles E. Schumer and Robert Menendez revealed that hundreds of thousands of New York and New Jersey middle class families could lose a critical tax break they've counted on to help pay the skyrocketing cost of college tuition if Congress doesn't act by the end of the year. The "College Tuition Tax Deduction" allowed more than 238,000 New York families and 121,000 New Jersey families to deduct up to $4,000 of their kids' tuition from their taxes. Schumer and Menendez said this tax deduction is needed now more than ever as they revealed that between the 2000-2001 school year and the 2004-2005 school year the price of going to a four-year college in New York jumped 22% and in New Jersey it jumped 31%. In response, Schumer and Menendez will call on Majority Leader Senator Bill Frist to bring legislation to the Senate floor to extend the tax break which was eliminated in May from the tax reconciliation bill in favor of restoring $5 billion worth of tax breaks for the major oil companies.

"A college education has become a necessity that's priced as a luxury - and it's breaking the bank for students and their families throughout the nation," Schumer said. "To hard-working New York parents, skyrocketing tuition costs mean debt and second mortgages. They mean lost family vacations and hard choices about how many children can be sent to school. The college tuition tax deduction makes these choices a little easier by saving families thousands of dollars every year."

"As someone who never could have attended college without federal financial aid, I understand the need to make college more affordable, not less," said Senator Menendez. "At a time when the average New Jersey family spends more than a third of its income on tuition expenses, our plan will restore overdue relief to the skyrocketing costs of a college degree and put us closer to the goal of making a college education a birthright for all our young people."

The college tuition tax deduction, which was passed into law in 2001 and co-authored by Senator Schumer, allowed middle-income families to deduct $3,000 from their tax return. The deduction was raised to $4,000 a year in 2004. Last year, single filers who made up to $65,000 a year and married couples with incomes up to $130,000 qualified for the tuition deduction. There was also a smaller, $2,000 deduction for those who earned more.

According to the Internal Revenue Service, an estimated 238,000 New York middle class families and 121,000 New Jersey middle class families took advantage of the tax deduction during the 2003 tax year, the last year for which data is available. 95,013 families in New York City took advantage of the college tuition tax credit in 2003, and across the nation 3.6 million American families took advantage of the deduction, saving them about $4.5 billion

However, in May, language extending the tax break for another three years was eliminated from the tax reconciliation bill in favor of restoring $5 billion worth of tax breaks for the major oil companies.

Schumer and Menendez today said that the critical tax break that saves middle class families thousands of dollars every year is needed now more than ever because college tuition costs are continuing to skyrocket. The Senators revealed the following numbers for both states:

• In New York, 238,000 families took advantage of the college tuition tax deduction in 2003. According to the National Center for Education Statistics, between the 2000-2001 school year and the 2004-2005 school year, the average price of going to a 4-year public college including tuition, fees, and room and board in NY increased by 21%, rising from $10,254 in 2001 to $12,441 in 2005. The average price of a 4-year private college including tuition, fees, and room and board in NY increased by 23%, rising from $25,171 in 2001 to $30,907 in 2005.

• In New York City, 95,013 families took advantage of the college tuition tax credit in 2003. Over the past five years, the average price of going to college in New York City is up 31 percent, rising from $9,632 in 2001 to $12,731 in 2006. In Long Island, 34,746 families took advantage of the college tuition tax credit in 2003. Over the past five years, the average price of going to college in Long Island is up 27 percent, rising from $9,544 in 2001 to $12,153 in 2006.

• In New Jersey, 121,000 families took advantage of the college tuition tax deduction in 2003. According to the National Center for Education Statistics, between the 2000-2001 school year and the 2004-2005 school year, the average price of going to a 4-year public college including tuition, fees, and room and board, in NJ increased by 36%, rising from $11,998 in 2001 to $16,349 in 2005. The average price of a 4-year private college including tuition, fees, and room and board in NJ increased by 25%, rising from $23,860 in 2001 to $29,751 in 2005.

• In New Jersey, families now spend an average of 37 percent of their income on college expenses. According to a new report by the National Center for Public Policy and Higher Education, the amount of family income spent on tuition, room, and board has increased steadily since 2000, when families spent 29 percent of their income on college.

Because Congress is currently in recess, Schumer sent a personal letter to Majority Leader Bill Frist (R-TN) demanding that he immediately bring to the floor legislation extending the college tuition tax deduction and other middle class tax breaks that are set to expire this year. In the letter, the Schumer said that "the time for political games is over. This tax break helps middle class families in New York and New Jersey and across the country deal with the increasingly heavy burden of paying to college, and its expiration puts into jeopardy the future of young people everywhere." Today, Schumer and Menendez pledged to fight to restore the tax break for middle class families in the upcoming lame duck session following the midterm elections.

Senator Menendez has authored legislation to expand and increase the Hope Scholarship Tax Credit, another important tool that helps families with the cost of college. As the credit has gone unchanged since 1997, Menendez's legislation would increase the credit to $2,500 to reflect increases in college tuition and would allow families to claim the credit for all four years of college. His legislation, the College Access and Affordability Act (S. 2243), would also provide up to $17,500 in loan forgiveness for college graduates who enter high-need public service fields.

Senator Schumer also authored the bi-partisan "Make College Affordable Act" (S. 759) which would increase the maximum amount of tuition costs that can be deducted to $12,000 each year and passed the Senate Finance Committee last year.

In addition, the bill would help college graduates pay off their loans by offering a tax deduction of up to $1,500 for interest paid on student loans over the first five years of repayment. The full deduction would apply to single filers with incomes up to $50,000 and joint filers with incomes up to $100,000. The legislation would still allow parents to choose Hope Scholarships instead of the tax deduction, based on which works best for them.

http://schumer.senate.gov/SchumerWebsite/pressroom/record.cfm?id=265478&&year=2006&