Isles' students letting tuition aid slip away

By Beverly Creamer
Advertiser Education Writer

Because of a dismal outreach effort by Hawai'i's colleges, students from middle-income families are missing out on an estimated $19 million in federal tax credits each year that would cut their tuition costs by up to $1,500 annually, according to a new study.

"We're leaving a whole bunch of federal money on the table that ought to be flowing into this economy," said David Cleveland, chairman of Honolulu Community College's faculty senate, who surveyed 200 students for his data.

"It takes about five minutes to fill out the form, it's a simple process," he said. "But almost half of the (survey) respondents reported they don't know a thing about it and another 30 percent were barely knowledgeable."

Using national data, Cleveland said that $7 billion a year is eligible in tax credits under the program and because Hawai'i represents about .43 percent of the nation's population, its students could conceivably take advantage of about $30 million in extra tax credits. However, because only about 36 percent of eligible families claim the credit, Hawai'i taxpayers are probably receiving about $10.8 million of that amount, leaving about $19 million on the table.

By comparison, the University of California-Berkeley has an 86 percent rate of students receiving the credit — and that school goes to great lengths to put the necessary tax forms and all pertinent information into students' hands.

Cleveland believes much more should be done to let students know about the credit that's aimed at helping those students and their families who earn too much to qualify for the Pell Grants that assist low-income families.

"I think there has been a legal reluctance to provide tax advice," he said. "But when we see that California is doing this I believe we will become more aggressive."

Under the Hope Tax Credit guidelines, students receive a 100 percent rebate of their first $1,000 of tuition and a 50 percent rebate of their second $1,000. The rebates are available for only the first two years of a student's college education, but the credits are retroactive to 1998, and may be applied for years later.

For instance, using the criteria, community college tuition would drop to just $26 a year for full-time "gap group" students in their first two years of college. Tuition at community colleges is now $1,052. The first $1,000 would be rebated fully and the $52 would be cut in half.

Income criteria

There are income criteria: The full credit is available for those earning below $39,999 as single wage-earners or below $79,999 as joint wage-earners.

The credit is pro-rated for those with incomes from $40,000-$50,000 for single wage-earners and $80,000-$100,000 for joint wage-earners.

The credit is part of the Taxpayer Relief Act of 1997. While the federal government estimated the credits would cost $7 billion that year alone, the cost was actually far less because only slightly more than one-third of the eligible students applied.

That remains the case nationwide, said Cleveland, with only UC-Berkeley aggressively pursuing the credits for its students. Last year, said Cleveland, UC students received $79.6 million worth of Hope Tax Credits combined with Lifetime Learning Credits, a second credit for older students that is also part of the same federal legislation.

The latter, he said, can be applied for by any returning student at any time, and students need not be full-time. The Lifetime Learning Credits offer a 20 percent rebate of the first $5,000 in tuition costs. These credits are available for any type of certified training, and there's no limit on the number of years returning students may apply for them.

The good news is that students and their families may still add the Hope Tax Credit to their tax return this year, even if they've already filed their taxes.

Cleveland also recommends that the new Student Information Network — to be called Banner — being developed to link all 11 campuses of the University of Hawai'i system, include an automatic notification of what each student would receive under the Hope Tax Credit, along with the appropriate forms, just as the UC system does.

Cleveland offers workshops at HCC to walk students through the process of filing for the tax credit.

The Hope Tax Credit is so ubiquitous, "you don't even have to pass your courses to get it," said Cleveland. "You're still eligible if you failed."

Reach Bev Creamer at bcreamer@honoluluadvertiser.com or 525-8013.