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Higher Education Groups Urge Congress to Extend Expiring Tax Incentives

August 01, 2012


​ACE today sent a letter to the House Ways and Means and Senate Finance committees, urging Congress to pass extensions of expired and expiring higher education tax incentives.

The letter, sent on behalf of 11 higher education associations, expresses strong support for the following tax provisions:

Set to expire on Dec. 31, 2012:

  • The American Opportunity Tax Credit (AOTC)
  • The expanded Student Loan Interest Deduction (SLID)
  • Expanded Coverdell Education Savings Accounts (ESAs), and
  • Employer-Provided Educational Assistance (Sec. 127) benefits

Expired on Dec. 31, 2011:

  • The above-the-line deduction for qualified tuition and related expenses
  • The Individual Retirement Account (IRA) Charitable Rollover

The Senate Finance Committee last night reached a tentative agreement on a package of tax extenders and has scheduled a final committee vote for Thursday. The bill includes the tuition deduction and the IRA rollover, the tax provisions that expired last year, but it does not include extensions of the provisions set to expire at the end of this year. However, those provisions were included in separate legislation the Senate approved on July 25 to extend Bush-era tax cuts on earnings of more than $250,000.

The full Senate will not vote on the tax extenders package until after the August recess, and final action in both chambers may not occur until the lame-duck session after the November election.

Senate Committee Looks at Simplifying Education Tax Incentives

In related news, the Senate Finance Committee held a hearing July 25 on higher education tax incentives, looking at potential improvements to make these benefits less confusing and more useful as a tool to improve college access.

A Government Accountability Office study released to coincide with the hearing found that 14 percent of filers didn't claim a credit or deduction for which they were eligible, missing out on about $466 in tax savings or refunds. Another 250,000 filers didn't claim the benefit that would give them the most money, and missed out on about $300 per taxpayer.

The panel looked at specific suggestions for simplifying the process as well as areas such as the uses, value and payouts of university endowments; charitable giving to universities; and tax-exempt bonds.

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