Tax breaks might be in store for students

Liz Bogut

For people repaying student loans or taking graduate courses paid for by employers, a tax break might be just around the corner.
The U.S. Senate passed a $4.3 billion measure Thursday that includes tax benefits for such people. Under the new legislation, the 60-month limit on deductions for student-loan interest payments would be abolished.
In addition, the bill would extend a current provision allowing employers to give educational assistance to employees until June 2004. It also expands tax breaks for employer-paid graduate-level courses, limited to $5,250 per year.
Such a provision would affect Diane Hornsten, a University secretary for Housing and Residential Life, who has received educational assistance for graduate courses in the past.
“Graduate students pay a lot to go to school,” she said. “It’s nice to have money in my pocket to spend on something else.”
Another bill provision would allow tax benefits for parental savings intended for children’s post-secondary education.
The bill would allow families to increase educational contributions from $500 to $2,000 per year without incurring tax liability.
“This is a spectacular piece of legislation for both parents and students,” said Sheldon Steinbach, vice president and general counsel of the American Council on Education.
President Clinton rejected a similar bill twice in the past.
“Obviously, this is a magnificent package, and the only thing better is one that the president vetoed last August,” Steinbach said.
Sen. Rod Grams, R-Minn., supports the policy, saying parents should play a crucial role in children’s educations.
“This bill empowers (parents) to do more to help their kids get ahead,” he said.
Sen. Paul Wellstone, D-Minn., did not vote for the bill, but for reasons unrelated to higher education, said a Wellstone aide. He is, however, sympathetic to people struggling to receive schooling and create opportunities for themselves, the aide said.

Liz Bogut welcomes comments at [email protected] She can also be reached at (612) 627-4070 x3217.