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Lifetime Learning CreditBoth the Hope Scholarship and the Lifetime Learning Credit are included in §25A of the Internal Revenue Code. Unlike the Hope Scholarship, which is good for as many students as there are in the family, the Lifetime Learning Credit is awarded only once per taxpayer per year. It allows a credit of 20% of the first $5,000 of tuition and fees for undergraduate, graduate, professional degree, and continuing education ($10,000 after 2002). There's no limit on the number of years a taxpayer can be eligible for the Lifetime Learning Credit so long as the student is enrolled at least half time. The Lifetime Learning Credit has the same phaseouts as the Hope Scholarship. That is, it declines in value as your adjusted gross income increases, as follows:
Because the Lifetime Learning Credit is so small, it seems unlikely to change the decisions people make about higher education. More likely, it will simply function to lighten ever so slightly the burden of college expenses. As Professor Daniel Posin of Tulane University observed, "This is a lot of rules for a relatively small tax benefit. All this from the same people -- the congressional tax law-writing leadership -- who want a flat tax." |
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