President Clinton has proposed an annual income tax deduction of up to $10,000 for college tuition expenditures and an annual $1,500 tax credit for up to two years of community college tuition. The aim is to make a college education more affordable for families at all income levels. However, the proposed policies would mainly help students from middle- and upper-income families who already attend or plan to attend college. The Congressional Budget Office (CBO) estimates:

• About 40 percent of the students eligible to claim the deduction would come from families with incomes of $50,000 or more, but would account for about half of the total deducted because they are more likely to have higher tuition expenses.

• Families in the 28 percent tax bracket would save $2,800 in taxes, but families in the 15 percent bracket would only save $1,500.

Other aspects of the proposals also limit their usefulness to students and their families.

• The assistance from deductions and credits would come after taxes had been filed in April, more than half a year after tuition was paid for the fall semester and more than a year and a half after the spring semester.

• The deduction would have to be taken in the year in which educational expenses were incurred, thus providing little assistance to students paying their own way through college with student loans.

• The $1,500 tax credit for community college tuition would give those now charging less an incentive to raise their tuitions.

The percentage of high school graduates going on to college has increased from 51 percent in 1965 to 62 percent in 1995, but only 58 percent of students from families in the lowest fifth of family income go on compared to 88 percent of those from families in the highest fifth. This is true despite the fact that the vast majority of low-income college students already receive federal or state grant support or both.

Source: "Taxing Matters: College Aid, Tax Policy and Equal Opportunity," February 1997, Education Resources Institute, 330 Stuart Street, Suite 500, Boston, MA 02116, (800) 255-8374, and Institute for Higher Education Policy, 1930 18th Street, NW, Suite 24, Washington, DC 20009, (202) 588-8383.