Proposes an Advance American Opportunity Tax Credit, which will allow students to receive a tax credit prior of filing a tax return, thereby making college more affordable.

“The federal government delivers more than $20 billion annually in federal student aid through the American Opportunity Tax Credit [AOTC]…[which] can only be received after filing a return at year’s end” (p.3). Providing another alternative that would allow for more ‘timely delivery’ of the AOTC would make college more affordable. This issue brief proposes Advance AOTC, a new process that would allow students to be better able to use the AOTC to plan for college, pay for school, and successfully complete their postsecondary education. Specifically, this proposed new process would streamline the process of delivering Advance AOTC payments. (p.3)

(Abstractor: Author and Website Staff)


Major Findings & Recommendations

• “Creating a process for more timely delivery of the AOTC would significantly improve college affordability, enabling more low-income students to enroll and stay in school. ‘Timely delivery’ means students could receive the AOTC when college bills are due” (p.3). • “The current process for claiming and receiving higher education tax credits fails to meet the needs of many of the students and families whom credits are intended to benefit” (p.4). • “In practice, the [current] credits primarily benefit more financially secure households who can afford college without the tax-based assistance” (p.4-5). • “The current disconnect between when costs must be paid and when credit assistance is available makes the AOTC less effective than it could be at improving access” (p.8). • “Approaches involving advance payment of credit dollars should be able to show how they are likely to improve student persistence and completion” (p.8). • “Making tax credit eligibility creation and claiming processes clear and easy to understand facilitates voluntary compliance” (p.8). (Abstractor: Author)