Obama Heads to Washington with an Education Plan

The election of Barack Obama on November 4th has generated new attention to his proposals for higher education. During the campaign, Obama outlined an education plan that included several items of interest to community college students. His college access plan includes a fully refundable tax credit for the first $4000 in college costs. His only stipulation at the time this was proposed was that each student perform 100 hours of public service each year. This could be completed during semester breaks and during the summer.

Another item in his agenda that has bipartisan support and is currently getting some consideration is the simplification of the financial aid application process. Obama also has pledged to keep the Pell Grant maximums rising with or exceeding the rate of inflation.

Obama also specifically targeted community colleges with his proposed grant program to fund a more complete analysis of what kinds of skills and educational programs that are in demand from students. He would also like to create more two year degree programs to address emerging careers as well as reward colleges that increase their graduation rate and increase the number of transfers on to four year schools.

Community colleges: Obama has proposed a new grant program that would provide funds to community colleges to conduct more thorough analysis of the types of skills and technical education that are in high demand from students and local businesses; to create new associate of arts degree programs that cater to emerging careers; and to reward institutions that graduate more students and also increase their numbers of transfer students to four-year institutions.

About Pam Linkous

Editor of my high school newspaper back when papers were carved into stone tablets and delivered by oxen, I now spend my days unraveling the mysteries of Blackboard (like, you mean my instructor has my paper NOW...I just accidently pressed enter....oh noooooo) and trying to understand how textbooks today cost more than tuition did when I went to college the first time. Despite needing several more hours per day to get everything done (who do I e-mail, Facebook, blog about that?), I still love to write and am willing to take on assignments that do not require staying up past my bedtime.
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One Response to Obama Heads to Washington with an Education Plan

  1. Pierce says:

    Web definitions for tax credit -
    a direct reduction in tax liability (not dependent on the taxpayer’s tax bracket)

    To clarify, you do not get $4,000 to spend (As a lot of people seem to believe on other discussions of the Obama student tax credit program although this report does not infer as such). Whatever your taxes are for the year, they will be waived until you reach the $4k limit providing you complete 100 hours of community service each year. If you are a dependent, you do not pay taxes, your parents do. Your parents may get the tax credit.

    If you are a poor working college student you might be making around $7/hr at your job. So, if you could have $4,000 worth all waived, you would definitely come out ahead making the $4,000 instead of $700. But $4,000 only applies if you would have $4,000 worth of taxes that year. At $7/hr, you just don’t.

    The federal tax brackets and calculator are listed here: http://www.moneychimp.com/features/tax_brackets.htm

    If you are working full time at $7/hr your annual income is about $14,000, which puts you in the %15 tax bracket. Your taxes on $14,000 come out to about $1,600, which comes out to $1,100 because you already get a $500 break for being a student. So you would potentially be working 100 hours to earn $1,100 toward your taxes every year. If you have other things that count as deductions, you earn even less. Just divide the total you owe in taxes by 100 and that is how much you earn per hour. You decide if it is worth it.

    This is not bad if you have no other deductions and the job at $7/hr, it increases your income to $11/hr for those 100 hours. And if you do it for four years, provided the rules will permit, you will end up earning all $4,000. The problem arises though, if you drop your job and just do community service full time, you will run out of hours in three weeks. You have $0 in spendable assets during that time. Then you have to go find another job. Also, if you have to put expenses on credit, you must figure how much money you lose to the %20 APR on the credit till you can pay it off. If you keep your job and do community service on the side, you have June, July, and August to fit in 100 hours. Which comes out to about 12 weeks. So, if you can do 50 hours of work per week, you’ll get it done.

    What I’d like to point out, rather disappointedly, is that you save the most money with the least effort ( just one summer of 100hr community service) if you have a larger income of at least $16/hr ($32,000 per year). I’ve been working for eight years without reaching that threshold. So, for any of us who are not gifted with a really good paying job, we are going to have to put 2 to 4 years of 100 hours of community service in to continue to meet the criteria, if it becomes a rule that we must continue to do community service each year we apply for it. So we end up working twice to four times as hard for the same benefit when we have lower paying jobs.