Clinton Offers Tax Breaks to Help Finance College

President Clinton on Thursday proposed expanding college tax breaks for the middle class by providing larger benefits and reaching more families on the upper ranges of the income ladder.

His package of nearly a dozen ideas also calls for a significant increase in Pell grants and other programs that provide assistance to low-income students, as well as a special effort to keep minorities from dropping out of college.

“The package keeps an appropriate focus on needy students but it doesn’t forget that families in the middle-income ranges also need help to send kids to college,” said Becky Timmons, a lobbyist for the American Council on Education, which represents colleges and universities. “So very often, we focus on one goal to the exclusion of the other.”

The centerpiece of Clinton’s proposals is a “college opportunity tax cut” of as much as $2,800 a year for families making up to $100,000 and individual taxpayers earning up to $50,000. Families earning up to $120,000 and individuals making up to $60,000 would get a reduced benefit. The chief beneficiaries would be students in the third and fourth years of college, as well as those pursuing graduate studies.

The new proposal expands on the Lifetime Learning Credit, a more limited tax break that is already in place and has a maximum benefit of $1,000 a year. The credit, which can be claimed for college costs regardless of the year of study, is now gradually eliminated for families earning between $80,000 and $100,000.

An estimated 13 million families and individuals are eligible for the Lifetime Learning Credit and the Hope Scholarship, two college tuition tax breaks that Clinton pushed through Congress in 1997. The Hope Scholarship is available only to first- and second-year students.

However, Treasury figures show that only about 5 million tax filers claimed a total of $3.4 billion in benefits for 1998.

While the goal of helping the middle class pay for college has bipartisan support, Thursday’s announcement was shaded by election-year politics. The president was joined by First Lady Hillary Rodham Clinton, who is running for a U.S. Senate seat in New York, and Sen. Charles E. Schumer, the New York Democrat with whom she would serve if elected. The first lady spoke at the event, on a day when news reports showed that she trails in fund-raising behind her likely GOP opponent, New York Mayor Rudolph W. Giuliani.