Higher education can be an expensive investment especially for part-time adult students who typically are not eligible for the kind of scholarships and financial aid packages available to full time 18-22 year old undergraduates. The Tax Relief Act of 1997 includes two tax credits which can be of special relevance to adult students.  As a result of the New Stimulus Package, the HOPE Scholarship Tax Credit now increases.  These increases have been named the American Opportunity Tax Credit.  The second tax credit is called, the Lifetime Learning Tax Credit. Unlike normal scholarships, these tax credits reduce the amount you pay on your tax return, allowing you more money to pay for college. The best part is that many adult students are eligible.

The HOPE Scholarship Tax Credit/ American Opportunity Tax Credit

The New HOPE Scholarship Tax Credit/ American Opportunity Tax Credit allow four years of college--your age is not relevant. The student can claim a tax credit equal to 100% of the first $2,000 spent on tuition and 25% on their second $2,000.  In essence, students can claim a $2,500 credit on their tuition and other expenses including textbooks.   The credit is only applicable if you are in an eligible degree program and enrolled at least half-time. At NJIT, half time undergraduates are those enrolled in either 2 or 3 courses, worth between 6 and 9 credits per semester; and half-time Masters level's students are those enrolled in 2 courses, worth 6 credits per semester.   A family can claim one Hope Tax Credit per student, so if you and your youngster are both attending college, each of you can claim this Tax Credit.

Eligibility for the new credit is limited to individual taxpayers with an income of $80,000, to $90,000 or a joint return of $160,000 to $180,000.

Expenses that qualify for the Hope Credit include school tuition and required fees, minus any tax-free grants or scholarships. While coverage of these expenses varies school by school, at NJIT, the costs of books and supplies are usually not covered.  To claim a Hope tax credit, taxpayers must file using federal tax Form 1040 or 1040A and attach Form 8863 (Education Credits); however, itemizing deductions is not a requirement.

Changes in the Hope Scholarship Tax Credit
	Hope Scholarship Tax Credit	American Opportunity Tax Credit
Maximum Credit	$1,800	$2,500
Credit Computation	100% of first $1,200; 50% of second $1,200	100% of first $2,000; 25% of second $2,000
Years Allowed	2 Years	4 Years
Income Phaseouts	$48,000 to $58,000 (single)$96,000 to $116,000 (joint)	$80,000 to $90,000 (single)$160,000 to $180,000 (joint)
Offset  The Alternative Minimum Tax (AMT)	No	Yes
Refundable	No	Yes, 40% ($1,000)

Educational Benefits for Veterans

The Montgomery GI Bill is an education benefit earned by Active Duty, Selected Reserve and National Guard service members. The benefit is designed to help service members and eligible veterans cover the costs associated with getting an education or training. The GI Bill has several programs and each is administrated differently — depending on a person’s eligibility and duty status.

Many post 9/11 veterans and service members will soon see a new package of education benefits. This new Post 9/11 GI Bill, or so-called GI Bill for the 21st Century, boasts the most comprehensive education benefits package since the original GI Bill was signed into law in 1944.

The new bill goes well beyond helping to pay for tuition; many veterans who served after Sept. 11, 2001, will get full tuition and fees, a new monthly housing stipend, and a $1,000 a year stipend for books and supplies. The new bill also gives Reserve and Guard members who have been activated for more than 90 days since 9/11 access to the same GI Bill benefits.

Limited Deduction for Tuition Expenses or as the Torricelli Deduction – Expires end of 2009

Taxpayers can deduct up to $4,000 in tuition expenses as an exclusion from income. This means you can deduct the tuition expenses even if you don't itemize deductions on schedule A of your 1040. The tax deduction is only for tuition expenses paid by the taxpayer. The value of the deduction depends on the taxpayer's tax bracket. For example, it is worth up to $1,000 for a taxpayer in the 25% tax bracket.

Since this deduction is taken above the line, it can make the family eligible for additional need-based aid or federal means-tested benefit programs during the next year since it reduces AGI. That can potentially make this deduction more attractive than the Hope Scholarship or Lifetime Learning tax credit, if the additional aid is in the form of grants instead of loans. For federal student aid key thresholds include $50,000 (simplified needs test to disregard assets) and $30,000 (automatic zero EFC). The deduction is especially popular for families who earn too much money to qualify for the Lifetime Learning tax credit.

US Department of Labor Training/599 Programs for the Unemployed

If you are receiving unemployment benefits from the state where you live or are about to file for unemployment you may want to find out about a provision in your state’s unemployment insurance law making it possible for unemployment recipients to receive benefits while attending a training course/program. The training has provisions and must be approved by the Department of Labor in your state.   When training has been approved under this provision, unemployment recipients are excused from the requirement to look for work, and may be eligible for additional weeks of benefits when funding is available.

For adult learners seeking retraining such as a graduate certificate or master’s degree (online or in a classroom) this could assist you.    What adult learners need to know is that in order for the NJIT courses and programs to be approved certain requirements must be met, including but not limited to the following basic ones. The education must: consist of a minimum of 12 hours per week, be completed within 24 months and enhance your ability to obtain more long term employment in the state or local labor market.

Check with your State’s Department of Labor to learn more about Training/599 Program requirements in your state.   If you are a New Jersey resident, visit the New Jersey Department of Labor Obtaining Claim Information page for a local phone number near you.

Work Study

Federal Work Study Program – Once you become an NJIT student, if your financial situation at the time warrants it, you may be eligible for need-based NJIT financial assistance including payment to you on an hourly basis for performing what is known as “work-study” assignments in on-campus offices and departments.

Grants

Pell Grant -   Adult learners may qualify if their financial situation warrants it.  However, please note that Pell grants are available only to those needy students who have not earned their first BA degree. The maximum Federal Pell Grant award for the 2009-10 academic year is $5,350.

Other Possible Sources Not Reviewed by NJIT

GradeFund is a new web-based private initiative intended to help both Graduate and Undergraduate students to raise money for tuition by achieving good grades.  Students invite their friends and family to sponsor their drive for academic achievement. Sponsors choose grade levels and sponsorship amounts for each grade (as low as $5). Each semester, students upload their transcript. GradeFund verifies the grades, collects money from your sponsors, and sends the money to schools or to you, depending on your sponsor’s preference.

GreenNote is a relatively new company created to help students obtain low cost student loans for education via social networking rather than through traditional lending methods. Students connect with their social network of friends, family, friends of family, community leaders and others to ask for small student loans. GreenNote helps them to formalize everything into legally binding loans and handles all the details from loan documentation through repayment. The benefits are significant. Students gain access to low-cost loans, currently at 6.8% compared to private lending alternatives that typically range from 8.5% to 20%. The lenders, individuals in the social network, also earn a return on their money while helping a student get an education.

CollegeDegreeFund.com  helps students or graduates with student debt.  Registration is required and “free”.  Registration makes you eligible to receive free sponsorship money from anyone who see your profile on our site. Most importantly you will be visible to corporate sponsors and if you fit their profile, they may sponsor you.