New Schumer-Authored College Tax Credit Will Save Middle Class Families Thousands Of Dollars - But Too Many May Be Unaware Of Provision; Schumer Announces Campaign To Publicize Savings

Press Release

Schumer Will Ask Every College President In New York State To Embark On Campaign To Inform Students and Families - Study Found 40% of Families Do Not Know About Available Education Tax Benefits

For Every $1 Spent On College Tuition, Middle Class Families Can Get $1 Off On Their Taxes, Up To $2500 - But Students Need To Know About Credit Before They Can Take Advantage

Credit Will Provide Upstate NY Families With Up To $750 Million In Savings This Year

U.S. Senator Charles E. Schumer today announced that he is embarking on a campaign to ensure that every eligible family in the state takes advantage of a Schumer-authored $2,500 college tuition tax credit included in the American Reinvestment and Recovery Act (ARRA), which passed earlier this year. Schumer will be contacting every college president in the state to request they make sure every student, and their family, knows that this credit is available. Schumer said that as students are headed back to school and families are drawing up their budget, now is the time to publicize the provision that will save families $2,500 a year -- per college student - on their tax bill. Promoting the credit now will allow families and students to better budget for the entire year and accurately determine how much they can afford to spend on textbooks, housing, and other education-related expenses. Too many families miss out on existing education tax benefits, and Schumer is worried that the trend will continue with this new credit. A congressional study found that 40 percent of families do not take advantage of existing education tax benefits, and if that rates stays the same New Yorkers will be missing out on hundreds of millions of dollars.

“As the economic downturn continues to take its toll and tuition costs skyrocket, these savings are needed now more than ever,” said Schumer. “This tax credit will provide real relief for middle class families by taking one dollar off their taxes for every dollar spent on college tuition -- up to $2,500. This tax credit will mean real savings for our middle class families, but only if they know about it. That is why I am embarking on this campaign to ensure that every student and every family knows about the tax credit so they can take advantage of it before the school year ends.”

In the last decade, college tuition has skyrocketed across the country. According to the College Board, private, four-year college tuition rose 6.3 percent last year while public four-year school tuition rose 6.6 percent. In Upstate New York, public college tuition has risen 42 percent, from an average of $4,195 in 2002 to $5,912 this year. Tuition has risen just as quickly at Upstate New York's private colleges, up 44 percent from an average $19,046 in 2002 to $27,216 this year.

The result of skyrocketing tuition is more students are graduating with massive amounts of debt. About 75 percent of students attending four-year colleges, public or private, in Upstate New York graduate with debt, according to the Institute for College Access and Success. The average debt of these graduates is averages almost $22,000. Here is how the numbers break down across the state.

* There are 51,200 students enrolled in 10 four-year colleges in the Capital Region. 74 percent of those students will graduate with debt averaging $18,735.
* There are 44,200 students enrolled in 12 four-year colleges in Central New York. 72 percent of those students will graduate with debt averaging $21,192.
* There are 55,600 students enrolled in 18 four-year colleges in the Hudson Valley. 73 percent of those students will graduate with debt averaging $22,391.
* There are 17,600 students enrolled in 6 four-year colleges in the North Country. 83 percent of those students will graduate with debt averaging $21.825.
* There are 60,300 students enrolled in 11 four-year colleges in the Rochester-Finger Lakes Region. 77 percent of those students will graduate with debt averaging $23,911.
* There are 30,100 students enrolled in 8 four-year colleges in the Southern Tier. 73 percent of those students will graduate with debt averaging $22,927.
* There are 41,600 students enrolled in 10 four-year colleges in Western New York. 78 percent of those students will graduate with debt averaging $22,377.

To provide real relief for middle class families saddled with skyrocketing tuition costs and to help prevent further decreases in college enrollment, Schumer introduced and successfully included a provision in the Economic Recovery Package to significantly increase the tax benefits provided by the current higher education tax incentives. The proposal combined the HOPE credit (a tax credit for higher education) and the college tuition deduction into a $2,500 credit that will be in effect for two years as of 2009. Schumer noted that this savings will be provided as a tax credit -- not as a deduction. That will mean that families who have a tax burden of over $2500 will see their taxes reduced by that amount. Families that pay less than $2500 in taxes will get the remained of the $2500 as cash back.

The college tuition tax credit works much better than the current tax incentives out there and saves families thousands more dollars every year. Below is a county by county breakdown of the tax savings:

· Families in the Capital Region would save $128,000,000 annually.

· Families in Central New York would save $110,500,000 annually.

· Families in the Hudson Valley would save $139,000,000 annually.

· Families in the North Country would save $44,000,000 annually.

· Families in the Rochester Finger Lakes Region would save $150,750,000 annually.

· Families in the Southern Tier would save $75,250,000 annually.

· Families in Western New York would save $103,982,500 annually.

Schumer noted that the $2,500 tax credit is just one of a number of tax breaks made available this year through the Economic Recovery Act, but many Americans are unaware of the existing incentives. In July, the IRS released a press release outlining the benefits available and reminded taxpayers to take advantage of them before they expire. Previous studies indicate that thousands of taxpayers miss out on tax credits each year either because they didn't know or because the process was too complicated to understand. According to the Government Accountability Office, 40 percent of eligible tax payers did not claim their education credits in 2005.

To ensure that all families don't miss out on the $2,500 college tuition tax credit, Schumer today announced that he is embarking on a major public awareness campaign to inform families and students of the tax break. Schumer said that he will write to every college president in the state to request they make sure every student, and their family, knows that this credit is available. Schumer will ask college presidents, who are in the best position to make this information widely known, to use email, mailings, bulletin boards, orientation packets, class room announcements and any other tools at their disposal.

Schumer added, “College presidents are in the best positions to alert their students and their parents of this opportunity and we want to make sure that every president is aware and that colleges are doing everything possible to alert their students of this terrific opportunity.”

Source