Education, Treasury Secretaries Highlight College Tax Credit in D.C. Student MeetingJanuary 21, 2011 |
WASHINGTON – Education Secretary Arne Duncan teamed up with Treasury Secretary Tim Geithner to host a lunchtime town hall-style meeting on Thursday with seniors from the Washington, D.C.-based Woodrow Wilson Senior High School, where they extolled both the merits and necessity of a college education. They also highlighted initiatives that Congress and the White House have undertaken to make college more affordable. The event took place at the University of the District of Columbia.
Duncan and Geithner focused primarily on the benefits of the American Opportunity Tax Credit (AOTC), which gives a tax credit of up to $2,500 per year for up to four years per student to families and self-supporting individuals who have tuition expenses; up to $1,000 of the credit is refundable. The AOTC was initially part of the American Recovery and Reinvestment Act, but was extended until 2012 as part of the year-end tax cut package that President Obama negotiated at the end of 2010. Geithner said that the president plans to propose that the credit be made permanent in the next budget submitted to Congress.
“I think we have a reasonably good chance for doing that because the economic case for doing it is so strong. It’s not that expensive, relative of basic gains and there’s a huge economic imperative for doing it,” Geithner said, noting there was much more support among Republicans for the AOTC than for several other initiatives that the administration believed to be critically important. According to Treasury Department analysis, in 2011, the credit could provide $18.2 billion in tax relief and benefit 9.4 million students nationwide. The average family could receive a credit of $1,900.
Duncan urged students to consider careers in government, the nonprofit sector or education because after ten years, their government-financed student debt would be forgiven through the Public Service Loan Forgiveness Program.
“Historically, I think we’ve lost lots of great talent—folks who want to teach but couldn’t afford the loans or couldn’t come back to help in their communities,” he said. “I encourage any of you who have those dreams to take advantage of that opportunity.” Many of the countries that are outperforming the U.S. in terms of college completion rates also are seeing an increasing number of graduates pursue careers in education, Duncan noted.
The Education secretary recalled the bygone era of his youth when it was actually possible for people to drop out of high school and still fully achieve the American Dream by working in the stockyards or the steel mills or some other blue-collar, manufacturing job. “Those jobs are all gone,” he said. And although the national unemployment rate is currently at a high of 9.5 percent, there unfortunately are many jobs that are going unfilled because there aren’t enough workers with the educational background and skills required to successfully fill them, Duncan said.
Geithner was a bit more prosaic. At 15 percent, the average unemployment rate is significantly higher in African-American and Latino communities and in certain pockets of the country, he explained. In addition, African-Americans, Latinos and people who are born into poor families are much less likely to go to college and more likely to receive a lower quality education than those who come from more affluent backgrounds. The 9.5 percent unemployment rate, which according to the Treasury secretary is the highest in generations, “doesn’t capture the amount of damage left by this [economic] crisis.”
But the average unemployment rate across the country for graduates from two- and four-year institutions is far lower at 5 percent, Geithner said, “so there’s an overwhelming, compelling case for making sure that you stay in school and start and finish college.”
Students, teachers and parents who attended the event were given the opportunity to ask the secretaries questions about the tax credits and other financial concerns. One parent noted that tax credits are not of much use if one doesn’t have funds to pay tuition in the first place.
“If you don’t have the money to pay tuition up front, that prevents individuals—particularly self-supporting students—from being able to even attend school,” she said, suggesting that the government make a direct payment that doesn’t benefit the student after the fact. Geithner said he saw the merit of her argument, but he doubted that there would be enough political support to pass such a measure.Semantic Tags: Employment • Labor Economics • Students • Tuition and Fees