Summary: The Hope Scholarship and Lifetime Learning Tax Credits.
I am writing to seek your assistance to ensure that your students and their families fully achieve the benefits of the Hope Scholarship and Lifetime Learning tax credits.
On August 5, 1997, President Clinton signed both the Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997. These historic legislative accomplishments put the Nations financial house in order while providing needed, targeted tax relief for Americas working families struggling to pay for college.
The Presidents Hope Scholarship and Lifetime Learning tax credits, which are worth up to $1,500 for each student and $1,000 per family, respectively, will help taxpayers pay college expenses for themselves and their children.
In developing these tax credits, we wanted to ensure that they would provide additional help for families to pay for college and not simply substitute for existing sources of financial assistance. At the Federal level, we did not want to force any student to lose a Pell Grant, for example, as a result of benefiting froma tax credit. Consequently we proposed, and the Congress enacted last year, a change to the eligibility formulas to ensure that receipt ofa Hope Scholarship or Lifetime Learning tax credit would not reduce any students eligibility for Federal student financial assistance. Similarly, we hope that these tax benefits will not be shifted from families to colleges and universities through increased tuition charges.
Therefore, Iurge colleges, universities, and State legislatures to follow our lead in ensuring that the new tax credits truly reduce families college expenses, and I see encouraging signs that this will happen.
First, a number of institutions have announced that they will not reduce institutional financial aid awards to students whose families benefit from the tax credits, while others have plans to increase aggregate institutional aid for low-income as well as middle-income students. Second, the recent College Board report indicates that this years tuition increases will average about four percent, continuing the recent trend of smaller annual tuition increases even though the new tax credits are now in place. Third, a number of States are developing, as Massachusetts already has, a comprehensive plan of reduced tuition charges, increased grant aid, and Federal tax credits to make community college free, or nearly free, for most students.
I am optimistic that more colleges, universities, and State legislatures will take similar steps, and I am counting on you to help ensure that Americas families receive the benefits intended for them from the Hope Scholarship and Lifetime Learning tax credits.
Richard W. Riley