Please take my college tax credit
(MoneyWatch) COMMENTARY My husband and I began saving for college for our son and daughter when they were infants and we've been fortunate enough to be able to pay for private colleges for our children without going into debt.
My daughter Caitlin graduated from college last year and my son Ben is finishing up his sophomore year.
Politicians in Washington, D.C., decided that people like my husband and I needed more help than other families who have struggled with college costs. Every year, we've been getting big fat federal education tax breaks.
In 2010, we received a $5,000 federal tax credit for doing something we would have done anyway - sending our kids off to college. For the 2011 tax year we are getting nearly the same break thanks to the American Opportunity Tax Credit.
Why the government is helping the wrong people
So what gives?
Chalk it up to craven political calculations. Politicians love to hand out tax freebies to affluent families, who are more likely to also be voters. What's inexcusable is that the government has been handing out billions of dollars in tax goodies to well-off families at the same time that they have been attacking the programs aimed at helping poor families pay for college.
This is the conclusion you can easily draw from a report released today by the Education Sector, a nonprofit think tank that's entitled, Moving On Up: How Tuition Tax Breaks Increasingly Favor the Upper-Middle Class.
Education winners and losers
The Education Sector looked at who is pocketing the higher-education tax credits and deductions from 1999 to 2009 and a big winner in recent years has been the upper-middle class. It didn't used to be that way.
According to the study, nearly 83% of the higher-ed tax benefits distributed from 1990 to 2001 went to families earning less than $75,000. But that has changed as Democrats and Republicans have been interested in currying favor with richer Americans. In the last three years, families making between $100,000 and $180,000 received more than a quarter of the tax benefit that was worth $3.88 billion.
All this wouldn't be so bad if politicians - and I'm talking mostly to you Republicans - weren't trying to rip the guts out of the Pell Grant program.
What should be done
I agree with the Education Sector's key recommendation:
At a time when Congress is struggling to fund the Pell Grant and financially needy students who pursue a higher education are facing mountains and mountains of debt, policymakers need to refocus the government's resources on its core mission of eliminating the financial barriers that prevent low-income and working class students from enrolling in and completing college."
Instead of making it even harder for low-income families to qualify for Pell Grants, the Education Sector recommends that the federal government let the American Opportunity Tax Credit expire at the end of the year and use the windfall to prop up the Pell Grant program.
Congress could start with my tax credit.
