As many Americans are already aware, late Tuesday -- at the proverbial 11th hour -- Congress passed a fiscal cliff deal package which included tax cuts for most Americans and ensured the extension of unemployment benefits for nearly 4.5 million people. However, of particular importance to Millennials (or Generation Y) are the various college affordability measures it included, like the American Taxpayer Relief Act of 2012 which President Barack Obama signed into effect Wednesday, Jan. 3.
As the New York Times outlined, these benefits include:
- Extending the American Opportunity Tax Credit through the end of 2017. This credit helps defray undergraduate college education expenses by allowing borrowers to deduct up to $2,500.
- Extending the Tuition and Fees Deduction, which allows taxpayers to claim up to $4,000 in tuition expenses, through this year.
- The deal also permanently repeals the previous five-year limit for deducting up to $2,500 via the Student Loan Interest Deduction. This means that students and families can claim student loan interest on their tax forms beyond 60 months.
However, the deal isn't all good news since the "sequester" -- a major part of the fiscal cliff, which includes across the board spending cuts -- was only postponed for two months and not resolved. Programs like education, defense, and health care are likely to see major cuts, and according to Mr. Kantrowitz, if these "across-the-board spending cuts [occur it] would mean an 8.2 percent reduction in student aid funding.” This means that the average college student is likely to have less work-study opportunities and grants, but only time will tell.
For more information about the fiscal cliff deal, in general, click here.