Families trying to pay for their children’s higher education might be able to save a few dollars because of a proposed education tax deduction.
Sen. Paul Wellstone, D-Minn., introduced an amendment to the federal budget bill May 17 that could provide additional tax relief to working families. This deduction would allow people to reduce their taxable income by up to $10,000 if they paid that money for higher education tuition or student loan interest payments.
“We want to provide tax relief for working families,” said Jason Kelly, public relations assistant for Wellstone. There has been criticism of the Republican tax plan, Kelly said, that would benefit higher income families. Wellstone’s amendment is a response to the Republican plan, he added.
The tax deduction would be available only to lower- and middle-income families earning up to $100,000 and single individuals earning up to $70,000. The amendment could save students and their families as much as $3,500 a year in taxes, said representatives for Wellstone.
But it’s too early to determine the exact savings the amendment could bring.
“We don’t really have a good answer yet,” said Barb Hoium, a representative for H & R Block. If Wellstone enters the deduction as itemized, Hoium said, it won’t really benefit anyone. “Students won’t see any real benefit unless it’s a direct credit,” said Hoium. “Then it will be wonderful.”
Direct credit is income, such as that spent on day care for children, that is not counted as taxable by the federal government.
“I would stand to benefit from any tax credit,” said Tod Severance, a senior in the College of Liberal Arts who says he has taken out several loans. “If that makes higher education more accessible, that’s fine with me.” But Severance said he thought the $100,000-a-year eligibility cap was high considering many families have only one child in college.
Yet, not all students are happy with Wellstone’s proposal.
“I think it sucks,” said Melanie Dalum, a College of Biological Sciences junior who hasn’t taken out any loans to pay for school. “I can understand that some families can’t afford it, but why should we have to help everyone else?”
Nationally, tuition has increased more than 40 percent since 1985, according to the College Board. College tuition rose 6 percent this year, which is more than double the rate of inflation, Kelly said.
Tuition increases at state universities, community colleges and technical colleges in Minnesota in the last 10 years have ranged from 2 percent to almost 9 percent each year, said representatives for Wellstone. The University’s Board of Regents on May 10 approved a University-wide 7.5 percent increase for next year’s tuition.
The full Senate is expected to vote on the 1997 budget bill and Wellstone’s amendment next week.