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Friday, December 19, 2014
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Hope Scholarship; Tax Breaks Will Help Students Attend College

The new HOPE scholarship and other features included in the federal Tax Relief Act of 1997 should make an education at Bluefield State College even more possible next spring than ever before. College officials say the new incentives could also help boost enrollments among both younger and returning students. "The HOPE scholarship program will really enhance the opportunity for both traditional and non- traditional students to obtain a college education, and we are enthused about the increased access to higher education that will be afforded by the program," BSC Interim Vice President of Student Affairs John Cardwell noted. Technically not a "scholarship," but a tax credit, the HOPE legislation allows eligible students pursuing the first two years of postsecondary education to receive a tax credit of 1 00 percent of the first $1,000 of tuition and fees, and 50 percent of the second $1,000 on their federal income tax. Students must be enrolled at least half-time (six credit hours) in a degree, certificate or other program leading to a recognized education credential. The measure takes effect January 1, 1998 and applies to education provided in academic periods beginning after that date. The Clinton Administration made the HOPE Scholarship a key part of its 1997 education/tax cut package, designing HOPE to assist in making the first two years of college the new standard for U.S. students. The tax credit is one of a series of measures aimed at making a college education affordable to the majority of low and middle income citizens. HOPE does come with some qualifications. Individual filers who earn more than $50,000, and joint filers with adjusted gross income exceeding $1 00,000 do not qualify. In addition, students convicted of a felony for the possession or distribution of a controlled substance are ineligible. And students who receive other forms of financial aid such as a Pell Grant will have the amount of their eligibility for HOPE reduced by the amount of aid their receive. In addition to the HOPE tax credit, a number of other Tax Relief Act features make college the best buy it has been in years. Tax credit beyond the first two years -- College juniors, seniors, graduate students, adults returning to college and students attending less than half time are eligible for a new lifetime learning credit. The credit is worth 20 percent of the first $5,000 of tuition and fees through 2002, and 20 percent of the first $1 0,000 after that. The same income restrictions that apply to HOPE are in effect for this benefit. The credit is available for expenses paid after June 30, 1998. Exemption of employer-provided assistance -- Section 127 of the IRS Code allows working adults to exclude annually from taxable income up to $5,250 in employer- provided educational assistance., The law is retroactive to May 31, 1997 and applies only to undergraduate programs. Deduction of student loan interest -- The new law allows a deduction of up to $2,500 per year of interest on education loans for expenses of students enrolled in higher education. The maximum deduction is $1,000 in 1998, increasing in $500 increments until it reaches $2,500. The deduction is allowed only for the first 60 months of interest payments, and has income level restrictions similar to the HOPE tax credit. Savings incentives -- Now individuals may make penalty-free withdrawals from an IRA to pay for higher education. The measure also creates education IRAs for children under age 18. Annual contribution to these accounts is limited to $500 per beneficiary. Exemption of scholarships and tuition remissions -- Section 11 7 of the IRS Code excludes from taxable income amounts received as a qualified scholarship, as well as tuition remission support for relatives of employees of colleges and universities.