A handful of Republican-led states filed a lawsuit to block President Joe Biden’s plan to eliminate federal student loan debt for millions of individuals.
The cost of a college education in America has never been higher. In reality, the total amount of student debt in the United States is thought to be above 44 million dollars or 1.6 trillion dollars.
Student Loan: Qualified Education Expenses
In fact, the Student Loan Debt Relief Plan, unveiled by the country’s current president Joe Biden in 2022, promised to cancel up to 20,000 dollars in student loans for persons making 125,000 dollars or less annually. Although the idea appeared hopeful at first, the Supreme Court ultimately rejected it, and in 2023, decisions about its future were still being made.
The bill has created a lot of discussion over student loans, with many people now fearing that a college education is out of their reach financially.
As the bill is being debated, it might be wise to be aware of how the Qualified Education Expenses initiative, supported by the Department of Internal Revenue Services (IRS), can help you save money on your dependent’s tuition.
For qualifying students, qualified education expenses include fees, tuition, and other relevant costs. If you file your taxes jointly, your spouse, parent, or another relative or friend may pay these costs. Some of the expenses related to attending college that qualify. The following are some college expenses that are deductible as educational costs.
- Tuition, fees, and additional costs associated with enrollment
- Activity fees for students
- Books and materials needed for the coursework
Here are some expenses that won’t be regarded as educational:
- Room and board
- Insurance
- Medical expenses (including student health fees)
- Transportation
- Similar personal, living, or family expenses.
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Tax Credits For Private, Public Education
But when it comes to how to best resolve differences between tax credit systems for public and private education, Montana’s legislators have staked out different positions.
Legislators in the Montana House have been debating changes to tax credit programs that help public schools and scholarships for private schools in the state for the past two weeks. The debates stem from worries about the fair allocation of Innovative Educational Program (IEP) money that surfaced at the beginning of last year.
In order to direct private donations to K–12 public schools, a scheme was launched in 2015 that gives donors a dollar-for-dollar tax credit for their contributions.
The per-donor credit limit was increased from $150 to $200,000 and the total number of credits was capped at $1 million during the 2021 legislative session. The corresponding tax credits for contributions to organizations that offer scholarships to students in private schools in Montana were evaluated using the same guidelines.
Democrats and Republicans in this session are still divided on how to address the issues of disproportionality that these initiatives have brought up as well as more general issues.
Rep. Mark Thane, D-Missoula, proposed cutting the credit amount per contributor to $2,000 last month, arguing to his fellow legislators that the existing credit numbers not only unfairly favor districts in affluent areas but also allow donors to essentially “wipe out” their state tax obligations. On January 24, he presented his idea to the House Taxes Committee.
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