New Legislation for Education for the 2009-2010 Tax Year

Following is a summary of the new legislation which will affect funding for college for the 2010-1011 school years.


Maximum Pell Grant

2009-2010 school years- $5,350 (beginning July 1, 2009)

2010-2011 school years-$5,550 (beginning July 1, 2010)

There’s also a Pell Grant program increase that will cover an additional 800,000 students.

Total number of Pell Grant available by 2010: about 7 million.



Work Study Program



Federal Work-Study program gets an additional $200 million

Enough to pay for approximately 130,000 new work-study jobs

Averaging $1,500 per job per year.



American Opportunity Tax Credit



$2,500 tax credit for postsecondary education tuition, fees, and eligible related expenses.

You get a dollar for dollar tax credit for the first $2,000

25 cents on the dollar for the next $2,000.

Textbooks and course materials included

Single filers with an Adjusted Gross Income (AGI) up to $80,000 and joint filers with an AGI up to $160,000 can claim the full tax credit. (Single filers with an AGI between $80,000 and $90,000 and joint filers with an AGI between $160,000 and $180,000 may get a partial credit.)



This credit is tax-refundable even for people who earn too little to pay taxes; low-income students and families will be able to claim up to 40% of the tax credit in the form of a tax refund. This new feature will allow approximately 4 million additional students to benefit from the program. Note: This credit does NOT apply to your 2008 taxes. It replaces the existing Hope tax credit next year, for the 2009 tax season