Q: How does the newly enacted tax relief law help out college students?
A: As the chief Senate architect of the third biggest tax cut since World War II, I strongly supported education-related tax breaks to help more Americans afford higher education. A good education is like a non-stop flight to prosperity. However, some folks will experience some financial turbulence even before they can get off the ground. Access and affordability are two rungs that need to be scaled before hard-working academic achievers can begin their climb up the ladder to the American Dream. As a strong advocate of the student loan interest deduction 20 years ago, I pushed hard during negotiations on the tax bill to expand and improve this education tax break to allow more students to take advantage of it. Congress eliminated the deduction altogether in 1986. I was able to partially restore it in 1997. This year, I won approval to fully restore it by lifting the 60-month limit to allow individuals to deduct their student loan interest for the lifetime of the loan. For the first time, those who make voluntary payments of interest now will be able to deduct these installments as well as the regularly scheduled
payments.
Q: What other specific changes are included in the new law?
A: Effective December 31, 2001, the income threshold will increase from $50,000 to $65,000 for single taxpayers and from $100,000 to $130,000 for married taxpayers filing joint returns. It doesn't make sense for the government to institute a policy that encourages advanced education, but at the same time shuts out tiers of folks whose education leads them to an earnings level
that "phases them out" of the tax benefit. After 2002 the income ceilings also will be adjusted each year for inflation. When college graduates leave their higher school of learning behind, it is virtually guaranteed that their hard-earned academic achievement will open the door to economic opportunity. Yet, many graduates are burdened by seemingly endless months of debt repayment as "Pomp and Circumstance" all but fades into a distant memory. Making student loans tax deductible makes sense. It gives students a break to help get them off to a good start in their careers as well as within their communities. This provision also serves as an incentive for those who are considering returning to school to obtain technical training, a first-time degree or an advanced professional degree. With the president's signing of the tax bill on June 7, at
least now you know in advance that you may be eligible to deduct the interest from your student loans for the lifetime of the loan. The federal government ought to adopt more policies that favor and encourage an individual's ability to pursue and pay for higher education.