In addition to help people who are unemployed, the Obama stimulus package also gives debt relief for students. While the student loan limits will not change and therefore may prevent students from going to college, there are some positives in the stimulus plan. Here are the details:
$2,500 in Scholarship Tax Credit
You can claim up to $2,000 as a tax credit from qualified tuition and related expenses. This results in a total tax credit of $2,500 which can be claimed during your first 4 years in college. Before, it was only first 2 years. If you owe only very little in taxes, you can receive a tax refund for up to 40% of the credit.
Items You Can Claim as Tax Credit
Tuition and fees & now course materials for tuition and fees are the things that you can claim as tax credit.
Who is Eligible?
If you are single – phased out if your adjusted gross income (AGI) is greater than $80,000
If you are married – phased out if your adjusted gross income (AGI) is greater than $160,000
Increased Pell Grant Funding
Funding for Pell Grants has been increased to $5,350 in 2009-10 and $5,550 in 2010/11 from $4,731. These Federal Government grants are specifically designed for the lowest income students and do not need to be repaid.
The 529 Savings Plans
If you don’t already know, a 529 savings plan is a tax-free college savings account sponsored by a particular state or group of states and is only allowed to be used for college expenses. This savings plans have now more options where you can use it to buy computers and other technology related items for your college education.
Federal Stafford & Perkins Loan Limited
The request to increase the loan limits for student loans was not included in the final bill. As student loan lenders continue to reduce their private student loan programs, it is now difficult for students to obtain credit for college.