Hope Credit
Candlefocus EditorThe Hope Credit was a great benefit to those unable to afford higher education, but the variable eligibility requirements made it difficult for some to qualify. To take advantage of this tax credit, the income thresholds in the student’s household must have been such that neither parent’s adjusted gross income (AGI) exceeded $80,000 as a filing single, or $160,000 filing jointly.
Additionally, the student must have been enrolled for a minimum of half-time in one of the following: an undergraduate degree program, a postsecondary vocational program, or a full-time program leading to a certificate or degree from a qualified educational institution.
While the Hope Credit was a great benefit to those who already had difficulty in affording higher education, it was not enough to provide opportunities for everyone. To better provide for students and families, Congress passed the American Opportunity Tax Credit in 2009. This would replace the Hope Credit and offer more aid than the Hope Credit, extending the eligibility period from two years to four. In addition, the credit is partially refundable and the income thresholds are set higher than with the Hope Credit.
The Hope Credit was and still is an effective measure in providing educational benefits to those unable to afford a college education. It offered an incentive to pursue higher education and a way to make their educational goals more attainable. While the replacement of the Hope Credit with the American Opportunity Tax Credit provides more robust benefits, it has, in a way, all been made possible by the forerunner of educational financing benefits: the Hope Credit.