Clock ticks down on billions in tuition tax credits

Among the many tax breaks waiting for Congress to rescue or let tumble off the fiscal cliff is more than $18 billion in savings for families who pay college and university tuition.

The American Opportunity Tax Credit expires on December 31st, and, with it, financial relief averaging $1,545 per recipient who pays for college.

Compounding the dilemma is the fact that an increasing portion of these tax breaks goes to families whose adjusted gross income is between $100,000 and $180,000, according to calculations by the College Board.

They get 23 percent of the savings, or $4.3 billion a year. In all, 39 percent of the tax break, which was meant to help low-income students, is being steered to families who make $75,000 or more per year.

The federal tax credit goes to about 4.5 million students and their families. They can deduct up to $2,500 of the cost of tuition, fees and course materials for the first four years of attending a postsecondary educational institution.

Read more here about the billions in financial aid going to college students who the government says don’t need it.