THE WHITE HOUSE
Office of the Vice President
VICE PRESIDENT GORE HIGHLIGHTS ADMINISTRATION TAX CUTS THAT HELP MORE STUDENTS AFFORD HIGHER EDUCATION The Clinton/Gore Hope Scholarship and Tuition Tax Credit Help 7 Million More Students than Congressional Versions
PITTSBURGH -- Vice President Gore today (7/8) released a state-by-state analysis which shows that 12.6 million students would benefit from the Clinton/Gore Administration Hope Scholarship and Tuition Tax Credit -- 7 million more than the Congressional versions.
"While adhering to the budget agreement, our proposal provides a substantial tax cut for virtually any investment in postsecondary education and training," said the Vice President. "Compared to the Congressional plans, our tax credits would help more types and ages of students, including older students seeking the education they need to succeed in the workplace. Our plan aims to lessen the financial stresses associated with going to college for students across the nation."
The Vice President released the state-by-state analysis at a forum with higher education students at the University of Pittsburgh. For example, the analysis showed that nearly 545,000 students in Pennsylvania would benefit from the Administration's tax package, about 303,000 more than under the House and Senate versions of the tax cuts agreed to in the balanced budget agreement. Discussing the need for expanded higher education assistance with the Vice President were undergraduates, graduate students and adults returning to higher education or going to school for the first time to enhance their job marketability.
Stanley Ikenberry, President of the American Council on Education and a supporter of the Administration's education tax proposal, accompanied the Vice President to Pittsburgh. Ikenberry's council represents 1,600 colleges and 200 higher education organizations and associations.
The Administration plan would cover: part-time students seeking to improve or acquire job skills; students beyond their first two years of undergraduate study; and graduate students. The Congressional plans do not provide comparable education benefits for students after their first two years of higher education, including adults returning to school, graduate students and 3rd- and 4th-year undergraduates. Under the Congressional plans, 5.6 million students would benefit as compared to 12.6 million who would benefit under the Clinton/Gore Administration proposal.
Key elements in the Administration plan include:
Tax Credit for Third- and Fourth-Year Students and Lifelong Learning: Undergraduates beyond their first two years, graduate students, and working people going to school part-time to improve or acquire job skills would benefit from a 20 percent tax credit on the first $5,000 of tuition and required fees through the year 2000, and after 2000, a 20 percent tax credit on the first $10,000 of tuition and required fees.
HOPE Scholarship: A maximum $1,500 credit for the first two years of postsecondary education. Students attending at least on a half-time basis would receive a 100 percent credit for the first $1,000 of tuition and required fees and a 50 percent credit for up to the next $1,000.
Education and Retirement Savings Accounts: Allows penalty-free IRA withdrawals for undergraduate, post-secondary vocational, and graduate education expenses. Additionally, taxpayers are given the opportunity to deposit their child tax credit plus an additional $500 in a Kidsave Account for the child's education, first-time home purchase or the taxpayer's retirement. Earnings would accumulate tax-free in the Kidsave Account and no taxes would be due upon withdrawal for an approved purpose.
Employer-Provided Education Benefits: Extends permanently Section 127 of the tax code, which allows people to exclude $5,250 of employer provided education benefits from their taxable income. Both undergraduate and graduate education would be eligible.
State-by-state numbers and other background are available by calling 202-456-7035.