Sen. Marco Rubio (R-Fla.) and Rep. Aaron Schock (R-Ill.) June 4 introduced companion bills that would save nearly $4 billion dollars by eliminating wrongly dispersed higher education tax credits.
The Republican-backed Higher Education and Skills Obtainment Act (H.R. 2253, S. 1090) would consolidate education tax incentives into one credit, according to a joint June 4 press release.
"One of the most complicated sections of our tax code is the numerous temporary tax incentives offered for higher education, which often do little more than serve as justification for out of control tuition increases," Schock said in the release.
The bill would eliminate tax credits to individuals:
- who are not students or did not attend an eligible institution,
- who attended class less than half time,
- who have exceeded four-year credit limitations, and
- who are nonresident aliens.
To help millions of Americans pursue higher education and save taxpayers money, the bills also would provide a yearly $2,500 tax credit for the first four years of post-secondary education.
"America must increase the accessibility of post-secondary education in order for our people to remain competitive in our increasingly global economy," said Rubio in the release. The goal, he said, is to "replace this complex and burdensome tax system with a simple provision to assist eligible students, whether they are pursuing skills training or a university degree."
The bill also contains these additional cost-saving measures:
- refundability of higher education credits reverted to pre-stimulus levels, for savings of $8 billion per year;
- making sure amount of eligible expenses reflects what was actually received from the educational institution, not what was billed;
- ensuring income phase-out levels would now be reflective of appropriate poverty levels; and
- eliminating the direct credit for graduate school attendance--which is often cited as a contributor to higher education costs, totaling $2 billion per year.
"We have always been long supporters of simplification and there are provisions [in the bills] that we do like," Steven Bloom, the director of federal relations for the American Council on Education, told BNA June 10.
"However, there are some current benefits we would like to preserve that help graduates going back [to school] for retraining and lifetime learners. The American Opportunity tax credit, originally proposed by President Obama, is most helpful to lower income students," Bloom added.
The bills have been referred to the House Ways and Means Committee and Senate Finance Committee.