College Tax Breaks May Be Made Permanent

Student loan debt is currently the highest form of debt Americans carry. Unlike other types of outstanding balances, consumers cannot seek debt relief from student loans by filing for bankruptcy, leaving financially burdened individuals with few repayment options. To alleviate the burden, President Barack Obama has proposed making temporary education-related tax breaks permanent.

The American Opportunity Tax Credit allows consumers to deduct up to $2,500 of eligible education expenses, such as tuition, books and fees. However, the credit is due to expire at the end of 2010. President Obama asked Congress to consider a proposal which would make the credit permanent and help make college more affordable for Americans, according to Bloomberg.

"We think it sends a very important signal," Gene Sperling, a Treasury Department counselor, told Bloomberg. "Whether we're in good times or tough times, we don't ever want to discourage families from investing in their children's future and our economic future."

Recent studies show many low- to middle-income families do not take advantage of the tax credits and deductions for which they are eligible, causing them to miss out on a chance to reduce their tax liability and receive larger refunds.