If you ever want to see how federal student aid is used for political gain, look no further than the report on the American Opportunity Tax Credit released today by the U.S. Treasury Department. The accolade‐begging for the President begins right on the cover page:
The President created the American Opportunity Tax Credit (AOTC) as part of the American Recovery and Reinvestment Act, which he signed into law in February 2009. For tax years 2009 and 2010, the new law allows families with tuition expenses to receive a tax credit of up to $2,500 per student, and up to $1,000 per year of this amount is refundable. If the AOTC is made permanent, as proposed in the President’s FY 2011 Budget, a student could receive a credit up to $10,000 over four years.
The President, of course, doesn’t create these things, the legislative branch does. But the Prez, apparently, wants the credit for the credits. A White House event scheduled for today suggests why: It appears that the President will be using the report, as well as his proposal to extend the AOTC, to curry favor with college students, a potentially large voting bloc.
The content of the report, unfortunately, is just as bad as its PR use, going on and on about how much free money the credit offers for college, and breaking down the benefits so every type of filer can see how he or she might benefit. Meanwhile, there’s hardly amention of the AOTC’s cost — something in which you’d think the Treasury Department would be at least a little interested. But, to be fair, I’m not just talking about the obvious cost to taxpayers who will sooner or later have to foot the bill for this Santa Claus program. Arguably the even bigger cost is that expanding federal aid like this ultimately just enables colleges to raise their prices and capture the money, making it a major, self‐defeating source of fuel for rampant tuition inflation.
So the AOTC will do little or nothing to make college more affordable in the long‐run. It will, though, make colleges and their employeesbetter off, and create the powerful illusion that Washington politicians — especially, in this case, the President — are doing their best to make college affordable for all. And that, as pure‐PR reports like this one strongly suggest, is likely the primary goal.