The American Opportunity Tax Credit, or the AOTC, replaced the Hope Credit that was introduced during Bill Clinton’s presidency. The Hope Credit gave families a potential two-year credit to help offset tuition costs. The AOTC was introduced in fall 2009 as a part of Obama’s economic stimulus bill.

The AOTC provides families with 75 percent more of a tax credit than the Hope Credit, according to a statement from the White House. The credit will expire this year if it isn’t included as part of the new budget.

Nearly 12.5 million students’ families were aided by the AOTC in 2009, said Sandra Salstrom, a spokeswoman for the U.S. Department of Treasury. According to data from the department, families received an average tax credit of more than $1,700 per student per year with the AOTC in 2009. Data for 2010 is not available yet.

“The AOTC expanded the uses that the tax credit was for,” Salstrom said. “The credit is now expanded to cover supplies, books, computers, et cetera, which is great because obviously in the age in which we live, it’s more of a necessity to have these things than it used to be.”

Before, families only could claim the Hope Credit for two years and a Lifetime Learning Credit for the other two years of schooling or for all four years.

If the AOTC is made permanent this year, Salstrom said students still will be allowed to claim the Lifetime Learning Credit, but likely won’t because the AOTC is much more generous.
About 400,000 more students were able to take advantage of the AOTC in 2009 than the Hope Credit in 2008, she said. One of the big advantages of making the credit permanent is its ability to give four years worth of tax credits, she said.

“We’re hopeful (that it’s made permanent),” she said.“We understand that there’s a limited amount of time when Congress comes back after the election, but we’re trying to work with Congress and get the credit extended.”

But there’s a cost to all of the perceived benefits, said Paul Abramson, a political science professor at MSU.

“It’s hard to get an estimate of what this would cost,” he said.

“I think if there’s a Republican-dominated House (of Representatives), which is quite likely, it’s not going to happen. They’re just not going to go along with any proposals that Obama makes.”

The price might not be worth the small payback, Abramson said.

“From the student point of view, (the AOTC) is a very small amount of money per year, about 10 percent of tuition and other costs,” he said. “It’s a drop in the bucket.”

Although she’d never heard of the AOTC, anthropology sophomore Autumn Beyer said it seemed like a good idea for parents and students, but she was hesitant to support the credit’s permanency.

“I think it might be tough on the budget and the economy,” Beyer said.

“My parents cover my tuition so it would really help cover things, but they’ll have to be careful about making it permanent.”