Clinton Proposes Tax Credit for College Tuition

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President Clinton last week proposed a college-tuition tax credit that he said could make higher education an affordable option for everyone.

While falling far short of covering tuition at an Ivy League school like Princeton University, where Mr. Clinton unveiled his proposal in a commencement address, the plan would offer a $1,500 tax credit for two years after high school.

"Our goal must be nothing less than to make the 13th and 14th years of education as universal to all Americans as the first 12 are today," Mr. Clinton said as he explained the latest in a series of election-year initiatives designed to make college more affordable.

The idea for the federal income-tax credit sprang from the HOPE scholarships, a winning campaign theme and favorite initiative of Gov. Zell Miller of Georgia. The Georgia scholarship program, financed by lottery proceeds, guarantees students a free college education if they keep a B average.

Mr. Clinton's proposal, dubbed "America's HOPE Scholarships," would cover the first two years of a student's college education for families earning less than $100,000 and individuals earning less than $70,000. To keep the scholarship a second year, students would be required to keep a 2.75 grade-point average and avoid conviction of felony drug possession.

Republicans, including the presumptive GOP presidential nominee, Sen. Bob Dole of Kansas, criticized the plan, saying Mr. Clinton has backed out of promised tax cuts in the past.

"There he goes again," Mr. Dole told reporters. "Who knows what taxes he'll increase if he should be re-elected."

Gene Sperling, a deputy assistant to the president for economic policy, said the tax credit was not an election-year effort to appeal to middle-class voters. The White House would have introduced it last year had Mr. Clinton not been in protracted negotiations with Congress over the fiscal 1996 budget, Mr. Sperling said.

He also said it was not an effort to pre-empt Mr. Dole, who is expected to unveil his own tax-cut plans soon.

A Taxing Dilemma

The tax credit, which would require Congressional approval, was intended to cover the cost of the annual community college tuition in most states.

To receive the credit, taxpayers would simply deduct $1,500, or the actual amount of tuition paid if it were lower, from their federal income tax. In some cases, the credit would create or add to a refund.

Mr. Clinton has already proposed a $10,000 tax deduction for higher education and workforce training for families earning less than $100,000. To use that deduction, taxpayers would subtract $10,000 from their taxable incomes before calculating their annual tax obligations.

Families would be able to choose either the deduction or the tax credit.

In building a program aimed at opening the doors of colleges more widely to students of modest means, the president has also called for expansion of the Pell Grant and work-study programs. He has also proposed a new program that would reward the top 5 percent of the students in each state with $1,000 scholarships.

The combined cost of the deduction and the tax credit would be $42.9 billion over six years, according to the White House. About $35 billion has already been accounted for in the president's budget proposal.

The remaining $7.9 billion would be squeezed from a several sources, officials said. The administration proposes limiting tax deductions by multinational corporations, auctioning radio-spectrum rights, and increasing the passenger departure fee for international air travelers.

Vol. 15, Issue 38

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