Washington — A proposal to create a $3,000 tax credit for college expenses may be included in the economic-stimulus bill being drafted in the U.S. House of Representatives this week.
The credit would replace two existing benefits for tuition: the Hope tax credit, which allows families to take a credit of up to $1,800 per year against taxes they otherwise would owe, and a provision that allows people to deduct up to $4,000 from their taxable incomes. The current Lifetime Learning tax credit, worth up to $2,000, would remain in place.
The new aid — which was proposed by two Democrats, Rep. Lloyd Doggett of Texas and Rep. Tom Perriello of Virginia — would provide more money than current tax benefits do for higher education and give families looking to take advantage of such benefits a simpler choice than they have now, its advocates argue.
The plan would allow people to take a tax credit of $3,000 per year for tuition and other eligible expenses for undergraduate education and the first two years of graduate school. People who do not earn enough income to owe taxes would be eligible to take a tax credit of up to $1,500.
A spokesman for the House Ways and Means Committee, which is overseeing the development of the tax portions of the economic-stimulus package, said that it was too early to say what would definitely be included in the legislation but that the education tax credit was under consideration. A spokesman for Mr. Doggett said he “feels pretty confident” that the proposal will end up in the bill.
President-elect Barack Obama also proposed a new education tax credit during his campaign. His plan would provide a $4,000 credit in exchange for public service. That credit would also be available to people who do not earn enough money to owe taxes. —Sara Hebel




