[Congressional Record Volume 155, Number 1 (Tuesday, January 6, 2009)]
[Senate]
[Pages S128-S129]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY:
  S. 143. A bill to amend the Internal Revenue Code of 1986 to provide 
for a college opportunity tax credit; to the Committee on Finance.
  Mr. KERRY. Mr. President, today I am introducing the College 
Opportunity Tax Credit Act of 2009. This legislation creates a new tax 
credit that

[[Page S129]]

will put the cost of higher education in reach for American families.
  According to a recent College Board report tuition is rising at both 
public and private institutions. On average, the tuition at a private 
college this year is $25,143, up 5.9 percent from last year, and the 
tuition at a public college $6,585, up 6.4 percent from last year.
  Unfortunately, neither student aid funds nor family incomes are 
keeping pace with increasing tuition and fees. In my travels around 
Massachusetts, I frequently hear from parents concerned they will not 
be able to pay for their children's college. These parents know that 
earning a college education will result in greater earnings for their 
children and they desperately want to ensure their kids have the 
greatest opportunities possible.
  In 1997, the Congress implemented two new tax credits to make college 
affordable--the HOPE and the Lifetime Learning credits. These tax 
credits have put college in reach for families, but I believe we can do 
more.
  The HOPE and Lifetime Learning credits are not refundable, and 
therefore a family of four must have an income over $30,000 in order to 
receive the maximum credit. Almost half of families with college 
students fail to receive the full credit because their income is too 
low. In order to receive the full benefit of the Lifetime Learning 
credit, a student has to spend $10,000 a year on tuition and fees. This 
is more than $3,000 the average annual public 4-year college tuition 
more than three times the average annual tuition of a 2-year community 
college. About 56 percent of college students attend schools with 
tuition and fees under $9,000.
  In 2004, I proposed a refundable tax credit to help pay for the cost 
of 4 years of college. Currently the HOPE credit applies only to the 
first 2 years of college. The College Opportunity Tax Credit Act of 
2009 helps students and parents afford all four years of college. It 
also builds on the proposal I made in 2004 by incorporating some of the 
suggestions made by experts at a Finance Committee hearing held during 
the 109th Congress. My legislation creates a new credit, the College 
Opportunity Tax Credit, COTC, that replaces the existing HOPE credit 
and Lifetime Learning credit and ultimately makes these benefits more 
generous.
  The COTC has two components. The first provides a refundable tax 
credit for a student enrolled in a degree program at least on a half-
time basis. It would provide a 100 percent tax credit for the first 
$2,000 of eligible expenses and a 50 percent tax credit for the next 
$4,000 of expenses. The maximum credit would be $4,000 each year per 
student. The second provides a nonrefundable tax credit for part-time 
students, graduate students, and other students that do not qualify for 
the refundable tax credit. It provides a 40 percent credit for the 
first $1,000 of eligible expenses and a 20 percent credit for the next 
$3,000 of expenses.
  Both of these credits can be used for expenses associated with 
tuition and fees. The same income limits that apply to the HOPE credit 
and the Lifetime Learning credit apply to the COTC. These amounts are 
indexed for inflation, as are the eligible amounts of expenses. This 
legislation is only for taxable years beginning in 2009 and 2010 in 
order to make colleges affordable during these difficult financial 
times. It will also give the Congress additional time to work on a 
permanent solution to help with the rising cost of a college education.
  The College Opportunity Tax Credit Act of 2009 simplifies the 
existing credits that make higher education more affordable and will 
enable more students to be eligible for tax relief. I understand that 
many of my colleagues are interested in making college more affordable. 
I look forward to working with my colleagues to make a refundable tax 
credit for college education a reality this Congress.
                                 ______