:: Facing the Tuition Crisis ::  

If you’ve ever bought a car, you’re surely familiar with some of the common marketing techniques used to convince you that the car is affordable for you: “We’ll give you zero percent financing for sixty months,” the salesman tells the buyer purchasing with a loan or credit. “I’ll knock $2500 off the price of the car if you pay in cash,” the same salesman says to a buyer looking to pay immediately. Whether it is a reduction in price, a rebate, or an interest-free loan, the reality is that the buyers are usually saving the same amount of money.

Today, more people are choosing to go to college – partly due to the fact that there is more financial aid available than ever before. Unfortunately, tuition prices are higher than they ever have been before, too, and they continue to rise. This year, students and their families can expect to pay up to $1200 more for tuition than they did last year. The average total cost of tuition, room, board, and fees for public universities jumped almost 7% since the 2005-2006 school year, with an average annual price tag of $12,796. Private university costs far surpass that number with an average cost of $30,367 per year.

According to the College Board, in the past five years, the average cost of in-state tuition and fees at public colleges has increased 35% after adjusting for inflation. In the past 25 years, the average cost of tuition and fees has risen faster than personal income, consumer prices, and even health insurance. Fortunately for students and parents, there are financial aid programs, grants, and other types of aid available that enable students to pursue their education while reducing or delaying their payments. Yet, we need to look at what happens now that the funding for federal student aid has already reached $90 billion and college tuition continues to rise at such a rapid rate. Additionally, nearly two-thirds of college graduates leave school with debt, up from less than half in 1993 and for those students with loans, the average debt has soared from $9250 in 1993 to $19,200 - a 58% increase after adjusting for inflation.

In order to get tuition rates and federal financial aid under control, we must make a strong commitment to the consumers of higher education by improving federal student aid programs, preserving higher education tax deductions, and holding schools accountable for their role in containing costs.

Earlier this year, the House passed with my support H.R. 5, the College Student Relief Act of 2007. If this bill progresses in Congress, this act will cut the current 6.8% interest rate on federal subsidized loans in half over a five year period. The College Student Relief Act is an achievement in decreasing the burden of student loan debt. While this bill does not benefit students entering college, it eases the burden of student loan debt for some college graduates with subsidized loans who are in repayment.

Maintaining higher education tax deductions also eases some of the tuition burden by continuing to allow students and/or parents to deduct up to $4000 on their tax returns. This above-the-line deduction began in 2002 and will be up for reauthorization in December of this year. Seeing that this deduction is reauthorized will maintain this savings for students and parents who are in the midst of paying for college.

However, trying to improve the federal student aid program will not solve the college tuition crisis. Colleges and universities, particularly public institutions whose budgets depend heavily on state support, need to be working to contain costs and help reduce the escalation of tuition rates through proactive reforms.

Like the person buying a used or new car, the true cost of higher education can be somewhat difficult to determine. Parents and students need to know what the bottom line cost is for pursing a dream of going to college and earning a degree. Whether it is easing the burden of interest on student loans or reducing the price of tuition, consumers of higher education deserve a reasonable price for college, an understandable process for paying for it, and a relatively stable price for attending college over a period of four years. We must continue to work together on the federal and state levels, and with our colleges and universities to make certain that we are facing the tuition crisis from all directions. Together, we can make sure that parents and students feel that their college education was worth every dollar.

:: Earned Income Tax Credit ::

Each year, my office gets many phone calls regarding the Earned Income Tax Credit (EITC), one of the largest tax programs that American families use. To provide you with helpful information regarding the EITC, I have compiled the following list of resources that will help you determine if you qualify for EITC and address frequently asked questions regarding the EITC.

What is Earned Income Tax Credit?
The EITC is a refundable tax credit that reduces, or sometimes eliminates, the taxes that low-income earners pay. The EITC is the largest poverty reduction program in the United States, with nearly 21 million Americans benefiting from EITC.

Do I quality for EITC this year?
In general, your eligibility depends on income level, filing status, and number of qualifying children. The IRS has created an online tool to determine your eligibility. The EITC Assistant takes about 10 to 15 minutes to complete. You should have your W2 handy when using the EITC Assistant.

How much credit will I receive?
Once you determine your eligibility, you can estimate your credit amount using the IRS credit tool. You will need to know the amounts and types of income you received in 2006, and allow about 10 minutes to complete the tool.

What common errors might prevent my receiving credit?
There are number of common EITC errors that could delay or deny your ability to benefit from the credit. Some of these common errors are:

- Claiming a child who is not a qualifying child
- Using the wrong Social Security numbers
- Filing with the incorrect marriage status
- Reporting inaccurate income information

Many of these errors can be prevented by simply double checking your forms before you send them off to the IRS.