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Camp Floor Statement: H.R. 3393 – The Student and Family Tax Simplification Act

July 24, 2014

Today, more and more Americans are pursuing the dream of earning a college degree.  But for many, realizing that dream is getting more difficult.  Tuition prices continue to climb, making it harder for Americans to plan for and afford a higher education.  Worse yet, our broken tax code makes it harder than ever to pay for it.   

Currently there are 15 complicated, and at times, overlapping education provisions that include over 90 pages of IRS instructions.   Students and parents alike are already juggling busy schedules as is, they shouldn’t be forced to go through 90 pages of IRS explanations just to figure out the best way to save and pay for a college education.

We need a simple solution that makes it easier to qualify for tax relief and, ultimately, afford college.  We owe it to the millions of young adults paying their way through college, and the families who budget every year to save for their children’s education, to simplify the system and help make a good education affordable.

The bill before us, H.R. 3393, the Student and Family Tax Simplification Act, would do just that.  This legislation will make paying for college easier by combining and making more efficient four tax benefits for higher education into a new, simpler and more valuable American Opportunity Tax Credit.  And, this new, improved credit will provide greater benefits for those who need it most.  

I am proud that this bipartisan provision is based off of years of work by the Ways and Means Committee, and in particular, Committee Members Diane Black and Danny Davis, the co-chairs of the Education and Family Tax Reform Working Group, who worked across the aisle to help simplify the code.   I should also note that the Obama Administration has expressed support for an approach that assumes a permanent extension of the AOTC.  We have a real opportunity today to work across the aisle to make life better for hardworking Americans.   

By consolidating the current American Opportunity Tax Credit, the Hope Scholarship Credit, the Lifetime Learning Credit and the college tuition deduction into one simplified AOTC credit, college students can get the help they need without navigating almost one hundred pages of forms.  

This bill would provide a permanent 100 percent tax credit for the first $2,000 of certain higher education expenses, and a 25 percent tax credit for the next $2,000 of expenses.  The first $1,500 of the credit is refundable, ensuring that students get the benefit regardless of tax liability. This can go a long way for students and their families, especially in these tough economic times.

The American Association of Community Colleges and the Association of Community College Trustees, who cite the AOTC as “the most important source of support for college students in the tax code,” recently voiced their support for this bill stating, “The legislation achieves several important objectives for the nation’s college students, who continue to face substantial financing challenges, even at low-cost community colleges. Its simplification of the current array of higher education tax benefits is critical given that their complexity has led to widespread under-utilization.”

Additionally, this provision would allow Pell Grants to be used for a wider array of expenses, including room and board, without triggering additional tax liability.   Not only does this provision have widespread bipartisan support, but a post-election poll found that over 80 percent of Americans support extending these policies.

No one should be discouraged from pursuing continued learning.   But, because tuition prices continue to climb while wages continue to fall, families and students nationwide are wondering if they can even afford it.   Today, we can do better by these hardworking Americans.  I encourage my colleagues from both sides of the aisle to move this bill through the House, and ask both the Senate and the Administration to work with us in finding simple, commonsense solutions like this for the American people.