US Senate News:
Source: United States Senator for New Jersey Bob Menendez
WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance and Banking Committees, was joined by Senate Finance Chairman Ron Wyden (D-Ore.), Senate Banking Chairman Sherrod Brown (D-Ohio), and Senator Alex Padilla (D-Calif.) in introducing legislation to expand the American Opportunity Tax Credit (AOTC). The AOTC allows eligible taxpayers to reduce their federal income taxes and, in certain circumstances, receive a refund, making college education more affordable for working families. The bill would double the credit, raise income limits, and make the tax credit entirely refundable to help working families and students with the increasing costs of higher education.
“Education is the key to success and social mobility. Expanding the AOTC will help families keep up with the rising costs of a college education and increase the number of low-income families that can access quality higher education,” said Sen. Menendez. “Reducing the education cost burden and alleviating the debt students and their families incur to achieve college diplomas is a priority that all Congress must fight for. I hope my Senate colleagues from both sides of the aisle come together to support this legislation.” “Federal help has allowed millions of young people, particularly first-generation college students, afford higher education and build a better future, but there’s more we can do to ensure students are able to take advantage of federal assistance. Expanding the American Opportunity Tax Credit is a good place to start. It’s an investment in our young people, and I’m all in on this effort to make college degrees more accessible,” said Chairman Wyden.“Even before the pandemic, students were struggling to keep up with the rising cost of college, and not enough was being done to ensure that they have the opportunity to pursue jobs that pay well, that are fulfilling, and that lead to fulfilling careers. We must make sure that federal financial aid is designed in a way that meets the needs of students today and increases the academic and financial opportunities available to them. I’m glad to join my colleagues to support this effort,” said Chairman Brown. “With the rising cost of a higher education degree, far too many students are being saddled with a lifetime of debt after graduation,” said Sen. Padilla. “As a first-generation college student, I know how important education is to accessing better job opportunities and providing a higher standard of living for your family. We must ensure higher education is accessible for all, and this legislation is an important step toward this goal.”
The bill is endorsed by the National Association of Independent Colleges and Universities (NAICU), Rutgers University, the Association of Public and Land-grant Universities (APLU) and the Association of American Universities (AAU).
“The National Association of Independent Colleges and Universities (NAICU) applauds Senator Menendez’s efforts to expand the AOTC. This important tax credit helps low and middle income students and families pursue a college education,” said NAICU President Barbara K. Mistick, D.M. “The expansion of this benefit will not only provide more generous benefits, but it will also increase eligibility for the credit – allowing more students and families to qualify. As we emerge from the pandemic and see students returning to campus, this is a great time to use the tax code to encourage a college education.”
“I am grateful to Senator Menendez for proposing this expansion to the American Opportunity Tax Credit and for improving access to higher education. Thousands of low- and middle-income students at Rutgers stand to benefit from his proposal,” Rutgers President Jonathan Holloway said. “Expanding access to higher education is critical to our economy and to our future. Rutgers is grateful to Senator Menendez for his efforts to address the affordability of higher education for so many New Jersey families.”
“Higher education is a key pathway to upward mobility,” said Peter McPherson, President of the Association of Public and Land-grant Universities. “We must work to ensure that everyone who wants a college education can afford access and complete one. Strengthening the American Opportunity Tax Credit will help make the dream of a college education a reality for many more students.”
“We are thankful to Sen. Menendez for his efforts to make higher education more affordable for more Americans by expanding the American Opportunity Tax Credit. In particular, AAU supports updating the credit’s requirements to make far more low- and middle-income families eligible,” said AAU President Barbara R. Snyder.
The legislation would specifically:
· Double the maximum AOTC to 100% of up to $5000 of eligible expenses to help the credit keep up with the rapidly rising cost of a college education;
· Makes the AOTC fully refundable so low-income Americans that need it the most can reap the full benefits of the tax credit. Under the current law, the credit is only 40% refundable;
· Allow taxpayers convicted of low-level felony drug offenses to access the AOTC;
· Changes the income limits to be to $125,000 single filer/$250,000 joint filer receives the full credit. The credit is completely phased out after $150,000 single filer and $300,000 for joint filers.
The text of the bill can be found here.