Two tax bills were introduced in Congress this month, one of them earlier today, which are intended to make higher education more accessible and affordable for America’s families.

The first bill, authored on October 7 by Rep. Jim McDermott (D-Wash.), and co-sponsored by Reps. George Miller (D-Calif.), Robert Matsui (D-Calif.) and Dale Kildee (D-Mich.) is called the Personal Access to Continued Education (PACE) Act.

PACE would increase the Hope tax credit for higher education to $2,000, make the credit refundable and allow students who are studying less than part-time to claim the credit. According to Rep. McDermott, the bill would further streamline the Hope and Lifetime Learning Tax Credits into one easy-to-understand and use program.

In announcing the introduction of the PACE Act, McDermott said that his goal is “to increase American’s access to education and assist them in finding the tools to be competitive in the global marketplace.”
McDermott and his co-sponsors rightfully recognize that adult and non-traditional students are now the fastest-growing segment of college students, and that most of those individuals return to school so that they can successfully re-enter the workforce.

The bill introduced today by Rep. Phil English (R-Penn.) is a Halloween treat for current and future college parents called the Higher Education Affordability and Equity Act. It proposes several changes to the Internal Revenue Code (IRC), which governs the taxation of various college savings vehicles. The English proposal would:

  • expand the interest deduction for student loans by repealing the dollar limitation and increasing the phase-out beginning point;
  • increase allowable contributions to Educational Savings Accounts and change the reporting deadline for such contributions;allow room and board to be treated like tuition scholarships for tax purposes;
  • equalize the tax treatment of prepayment and savings plans in the context of need analysis; and
  • make permanent the education affordability provisions included in the Economic Growth Tax Relief and Reconciliation Act of 2001 (EGTRRA).

In addition, the English bill would make permanent the 2004 and 2005 levels for above-the-line expenses paid by a taxpayer during a taxable year for qualified higher education. In those years, taxpayers with adjusted gross income that does not exceed $130,000 for a joint return are entitled to a maximum deduction of $4,000 and taxpayers with adjusted gross income that does not exceed $160,000 for joint returns are entitled to a maximum deduction of $2,000. This EGGTRA provision is set to expire on December 31, 2005, while other EGGTRA education-related sections are due to expire on December 31, 2010.

College Parents of America commends both Rep. McDermott and Rep. English for recognizing that the tax code can be used in a positive way to promote accessibility to and affordability of higher education, a central legislative priority for our organization. If you happen to live in either Mr. McDermott’s or Mr. English’s congressional district, please take the time to send each of them a note thanking them for their leadership on these critical issues of support for higher education.

Next week in this column, I will compare and contrast the various proposals related to the reauthorization of the Higher Education Act that have recently been offered by Sen. Edward Kennedy (D-Mass), Rep. George Miller (D-Calif.) and Rep. Howard “Buck” McKeon (Re-Calif.). While there are some key differences in their proposals, I believe that each of these gentlemen has the interests of America’s current and future college students squarely in mind. Their tactics to help may differ, but their good intentions do not.

Happy Halloween from College Parents of America.