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College Tax Credit for 2010- 2012
More than the Hope Tax Credit

The college tax credit for 2010- 2012 answers this question:

How do you give taxpayers relief with the economy in recession, when they are paying high college tuition prices and suffering from college loan debt?

To encourage more people to go to college and learn new skills during the recession, a better tuition tax credit was needed.

One that would allow even students who did not owe federal income taxes, to reclaim part of the money they spent on tuition. And to ensure that only families who needed relief would benefit, income caps would be also be put into place.

These things are what make the new tax credit so unique (and so debated).

For 2010-2012 only, Congress enacted a new college tuition tax credit:

The American Opportunity Tax Credit

  • worth up to $2,500

  • for single filers with income below $80,000 (partial credit for those between $80,000 and $90,000) and joint filers with incomes below $160,000 (partial credit for those between $160,000 and $180,000)

  • 100% of the first $2,000 in qualified tuition and related expenses; and

  • 25% of the next $2,000 in qualified tuition and related expenses

  • for the parents of a dependent student or for the student if not claimed as a dependent

  • 40% of the credit ($1,000) is refundable


(If this tax credit is not extended or made permanent, see how different the one it will revert to is- the old Hope Tax Credit.)

Find out how to claim this education tax credit.

Federal College Tax Credits FAQs

What is an eligible educational institution?

Any school that participates in a federal student aid program (administered by the U.S. Department of Education) is eligible. All accredited schools qualify for the college tax credit, including online schools.

Which college expenses can be used to claim the credit?

Expenses that are required for enrollment or attendance at an eligible school, such as:

  • tuition
  • fees (only if mandatory)
  • books (whether bought at the school store or not)
  • supplies that are necessary for a course of study
  • equipment that is necessary for a course of study
  • any expense that the school mandates as a condition for attendance

What if expenses were paid with college loans?

You can take the credit- even if the loan is deferred until after graduation. This applies to private student loans as well as to federal student loans. Your loans can be either subsidized, or unsubsidized- it doesn't matter which for this tax credit.

What about college grants and scholarships, such as a Pell grant?

If the grant or scholarship is tax-free (as a Pell grant is) you cannot use the portion of expenses paid by that award to figure the credit. If you had expenses beyond the award amount, use that portion for the credit.

What is the time frame allowed to claim a college tax credit for 2010?

You may claim the credit for expenses paid in 2010 for college classes that began in 2010 or the first three months of 2011. So if you paid in December for the spring semester of 2011- that counts.

For more specific answers to tax questions about your individual situation, you can consult a professional tax expert, here.

There are other college tax credits and deductions that you can opt for instead of the American Opportunity Tax Credit, such as:

The Lifetime Learning Credit

  • worth up to $2,000

  • for single filers with income below $48,000 (partial credit for those between $48,000 and $58,000) and joint filers with incomes below $96,000 (partial credit for those between $96,000 and $116,000)

  • 20% of the first $10,000 in qualified tuition and related expenses

  • for the parents of a dependent student or for the student if not claimed as a dependent

  • may be used for college tuition at any level (part-time, also)


Education tax credits will also be subtracted from your income (taxed and untaxed) on your FAFSA next year.

The Tuition and Fees Deduction

If you choose, you can claim an education tax deduction instead of a college tuition tax credit.

  • worth up to $4,000 off your income

  • for single filers with income below $80,000 and joint filers with incomes below $160,000

  • for the parents of a dependent student or for the student if not claimed as a dependent

  • may not be used for any expenses other than tuition and fees (like room and board)


Usually a college tax deduction is used when your income is too high for a higher education tax credit. A school tax credit reduces the amount of taxes you pay and an education tax deduction reduces your income. (thereby lowering the amount of taxes you pay, but not as much)

Want the American Opportunity Tax Credit Extended?

The college tax credit has generated a lot of controversy. Many want it made permanent (or at least extended) and others think that the income caps are unfair.

What do you think? Add your thoughts to visitors' contributions, or create your own submission.

Title your entry

Other Voices

Click below to see contributions from other visitors to this page...

Punished for making too much.  starstarstarstarstar
I find these numbers ridiculous. I pay $36,0000 out of pocket each year and that is (net income after gross) for my daughter's college and she still has ...

Extend the Tax Credit for Obvious Reasons!!!!!  starstarstarstarstar
The college tax credit should obviously be extended in my opinion. The economy isn't going to get any better, and if people can't even afford to go to ...

This is just not fair at all!!!!  starstarstarstarstar
I have one child now in college and another on the way soon. My husband and I both work hard and we have a nice house. It is horribly disappointing when ...

CollegeTax Credit, Middle income needs help  starstarstarstarstar
My income is too high to qualify for any governmental assistance, but not so high that I can afford to send my daughter to college with no help. With house ...

Not fair when your income is just above $80,000-$90,000 mark you get NO tax deduction  starstarstarstarstar
I don't understand why there is an income limit on the tax deduction. I am a single mom and don't have 2 incomes...why should a two income house hold ...

Extend the Tax Credit  starstarstarstarstar
As the economy is still in recession I believe this tax credit should continue on till 2010. An education is important to many of us but the expenses of ...

Extension Only -- No raise on income cap.  Not rated yet
If an individuals income is above $80,000.00 there is absolutely no reason for that individual to receive this deduction. That is almost 4X the income ...

College tax credit...No matter how much we make...  Not rated yet
It is just as hard to live making good money in a good house paying all those bills as someone making less money living in a small house paying smaller ...

College Tax Credit, Don't just extend it, reform it!  Not rated yet
Another perspective:

I live in the Northeast where the cost of living is at the TOP of the scale. My "higher" salary (and I say higher relative to other ...

College Tax Credit: Grateful for Being Given a Chance  Not rated yet
Both of my degrees were lemons, and I dropped to being among the poorest in America. Now I think that where I am headed is going to put me in a better ...

College Tax Credit, Even Books Too!!!  Not rated yet
I thought you weren't allowed to use the amount you spent on books if you purchased them yourself. I was told this by the my daughter's college that I ...

College Tax Credit Income Limits- Expedient, not Appropriate  Not rated yet
The title says it all. Politics require the college tax credit limits, but it's absurd to argue that they're fair or that for any reason other than hard,...

Rising costs of college -- Americans need help  Not rated yet
Americans need help paying for college to ensure the future of our children and our country. I have twins entering college this fall as freshmen and will ...

Extend College Tax Credit for Life  Not rated yet
i just recently enrolled in college and I'm about to finish my 1st semester and enter my 2nd semester. I feel like the college tax credit should continue ...

Indefinitely Extending the College Tax Credit  Not rated yet
I am a parent of a child who will be attending UConn University in the Fall of 2011. I am middle-class and have tried to save for retirement,(I am 52) but ...

Books are expensive, College Tax Credit Helps  Not rated yet
Books are expensive, and most students don't get book stipends. I spent around $700(1 term) in books alone plus I had to pay some out of pocket expenses....

If we dont Educate our Country will Depreciate!  Not rated yet
Lets help people better themselves through education; this college tax credit allows just that! If you give more people the opportunity to educate themselves ...

Tax Credit, Fairness for the Middle Class  Not rated yet
The college tax credit is the only way to abate the institutionalized discrimination against the average working, taxpaying American.Grants and scholarships ...

Extending college tax credits fuels a slow economy  Not rated yet
PLEASE extend college tax credits.

College costs for the middle class, that large portion of the population that makes too much to qualify for favorable ...

College Tax Credit...The hard work should be RECOGNIZED!!  Not rated yet
I think that if you are willing to put forth the effort to further your education that it should be noticed. I know for myself, I am going to college to ...

College TaxCredit...Going for a Masters  Not rated yet
I believe many of us who have been laid off or let go in the past three years have come to the understanding that we need to pursue a career in another ...

Middle Class hit hard!!  Not rated yet
The college tax credit needs to be at least 50% of the cost for those of us who are out of reach of any grants, etc. The income range should be 50,000-...

American Opportunity Tax Credit Extended  Not rated yet
I feel this credit should be extended because there are parents (that do have kids in college) that are making over $58,000 a year. I am a single mother ...

College Tax Credit For Single Parents  Not rated yet
For the first time at 47, I'm going to college. My kids aren't even in h.s. yet. I only earn 17K a year. I need the break so I can continue.

With the ...

Extend American Opportunity Tax Credit past 2012  Not rated yet
As a state employee who has experienced a 14% wage cut for 2.5 years and a health premium increase of 25% in the last year, it is difficult to imagine ...

College Tax Credit...Huge Help  Not rated yet
The American Opp tax credit should be extended because it is a huge help for families struggling during these sad economic times. It helps to offset some ...

The American Opportunity Tax Credit Empowers Education  Not rated yet
This tax credit should be extended because education is the way the country will get out of the mess we are in due to the guys at Wall Street.

Education ...

Extend and Expand AOTC!  Not rated yet
As a single parent sending two awesome kids to college, I will be burying myself in debt over the next 14 years.

Why should I complain?

I made ...

Permanent Extension of American Opportunity Tax Credit  Not rated yet
This Tax credit is truly an investment in America. The students at higher education institutions are strained both ways: cost of education and time to ...

College Tax Credit, Rewarding Purpose  Not rated yet
The college tax credit rewards purpose.

As a part time professor I make just enough money teaching to pay my bills during the school year. At one point ...

Lower Income Families Need The College Tax Credit  Not rated yet
Lower income families can barely meet their day to day living expenses. We live from payday to payday. God forbid if we lose work from being sick and ...

Extend it to first four years of a degree  Not rated yet
I'm a graduate student who gets paid in pretzels. I wish I could use the tax credit for my fees and get a max of $1,000 back.

ANSWER: I see your ...

The Tax Credit Should Always Be Available!!!!  Not rated yet
With the cost of living increasing every year plus student loan debt, it is becoming impossible for students to pursue their education further past a bachelor'...

Broad Based Subsidies to Education Cause Tuition Increases  Not rated yet
It should not be extended. It will increase the cost of a college education.

If $5,000 were given to every college student, expect a $5,000 rise in ...

Tax extended From Student to Worker?  Not rated yet
People that are back in college now are smart, getting more skills for more trades in the workforce. Employers in the upcoming years will be looking for ...

Tax credit please KEEP IT HERE!!!  Not rated yet
I come from a family where my dad makes $150,000 gross and I have 5 brothers and sisters, with 3 who attend college or have attended college. NYS doesn'...

College Tax Credit for Medical Billing and Coding  Not rated yet


Medical Billing and Coding

I'm going to college to get an education to provide a better income for myself. If you are working fulltime, it's ...

Opportunity for continued employment  Not rated yet
I have a daughter entering college next year AND I am headed back to earn a PHD so that I can be competitive as a nursing faculty (which is a high need ...

Extend the American Opportunity Tax Credit (Anonymous)  Not rated yet
At this point in time, it's almost impossible to get a job that pays enough for a person to support their family unless they have a college education. The ...

High Tuition Costs Create Havoc on Household Finances   Not rated yet
College Tax Credit


Parents are trying to help their children become productive, educated members of society, but at what cost? Those of us who have ...

Stay-At-Home Penny Pincher  Not rated yet
I believe this tax credit should be extended past 2010 because I will be in college until 2012. I have to stay at home to take care of my 1-year-old son,...

Tax Breaks for College Pays Dividends  Not rated yet
I believe giving tax breaks for higher education provides an opportunity for more individuals to attend college. The better educated a person is, the more ...

A Tax Deduction Helps Valuable Education Users  Not rated yet
The college tax credit is a nice program! I am paying out of pocket while others get scholarships to abuse the system. I teach at a college and it is ...

College students Need More Help  Not rated yet
This will be extremely helpful for me this year. It will enable me to pay off a portion of my debt and attend summer courses ( which have been too expensive ...

Please Extend the Tuition and Fees Tax Credit  Not rated yet
We are the parents of a child who will be entering college in the Fall of '10. The unplanned birth of our child occurred when we were both very young (18)...

High College Tuition Costs  Not rated yet
January 29, 2010
Attn: U.S. Congress Joint Committee on Taxation

Dear Committee;

The tax credit will help me pay for my next term.
As I'm sure ...

College credit or Deductions for More Americans  Not rated yet
The income requirements should be higher to receive a tax deduction or credit. The cost of college has increased faster than incomes. Working parents with ...

The American Opportunity Tax Credit should be extended  Not rated yet
This tax credit should be extended because the economy is so bad, that people have been forced to go back to school. The price of everything is going ...

A College Tax Credit for the Life of Your College Loans  Not rated yet
Since my student loans are going to total a lot more than $1,000 per year, I think this tax credit should last for as long as I'm paying.

That's the ...

Extend the College Tax Credit  Not rated yet
As a student, I feel strongly that the current college tax credit structure should be extended.

Tuition costs are on a seemingly endless spiral into ...



college loan consultant plan for paying off student loans The new college tax credit should be included in your budgeting calculations for the 2011 and 2012 school years. This is money that you can put towards your tuition and reduce your future college loan debt.

And to get the most financial aid you can qualify for, learn about this year's FAFSA, before you fill it out.




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College Tax Credit Extended!

The Tax Hike Prevention Act* was signed on Dec. 17, 2010. This law extends the American Opportunity Tax Credit for two more years: 2011 and 2012, but it still is not permanent.

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