Financial Aid Options
TAX & SAVINGS OPTIONS FOR EDUCATION
Several new tax benefits are available to help families meet the cost of postsecondary education. These tax benefits
are intended to help students and their parents as well as all working Americans to fulfill a variety of educational
Education expenses paid with loans are eligible for both the Hope Scholarship and Lifetime Learning Tax Credits.
Education expenses paid with tax-free grants, scholarships, and employer-education assistance are NOT eligible for
either tax credit.
THE HOPE SCHOLARSHIP
The Hope Scholarship is actually a tax credit, not a scholarship. Tax credits are subtracted directly from the tax a
family owes, rather than reducing taxable income like a tax deduction.
A family may claim a tax credit of up to $1,500 per tax year for each eligible dependent. This can be done for up to
two tax years. A family may claim up to 100% of the first $1,000 of eligible expenses and 50% of the next $1,000 for
a maximum credit of $1,500.
The actual amount of the credit depends on the family’s income, the amount of qualified tuition and fees paid, and
the amount of certain scholarships and allowances subtracted from tuition. The total maximum credit also is based on
the number of eligible dependents.
To be eligible, a student must be enrolled at least halftime in an eligible program leading to a degree or
certificate. The student cannot have had a drug felony conviction in a year that the tax credit applies.
LIFETIME LEARNING CREDIT
This credit applies to tuition and fees for undergraduate, graduate, and continuing education coursework. A family
can claim on its tax return a credit equal to 20% of $10,000 of educational expenses; so the maximum benefit is
$2,000 each tax year. Eligible education expenses are offset by scholarships, grants, and other tax-free tuition
WHO IS ELIGIBLE FOR THE EDUCATION TAX CREDITS?
Kaskaskia College Office of Financial Aid does not offer income tax advice.
The taxpayer must claim the eligible student as a dependent, unless the credit is for the taxpayer or the taxpayer’s
spouse. The taxpayer is eligible for the maximum benefit with an Adjusted Gross Income (AGI) of up to $52,000 for a
single taxpayer (or $105,000 for married taxpayers). The credit amount is phased out between $52,000 and $62,000 for
single taxpayers (or $105,000 and $125,000 for married taxpayers).
Other tax incentives include Education IRAs and IRA withdrawals for higher education expenses. College graduates or
their families can also deduct student loan interest payments on the first sixty months of the loan
For more information regarding eligibility for the Hope Scholarship, Lifelong Learning Tax Credit, or any of the
other tax incentives, please contact your tax preparer or the IRS.
Educational programs for veteran students and eligible dependents are administered by the State of Illinois Veterans
Affairs Office and the Illinois Student Assistance Commission. Applications, processing, monitoring, and reporting
are accomplished in the Office of Financial Aid at Kaskaskia College.
All students receiving veteran educational benefits are required to meet the Financial Aid Satisfactory Academic
Progress Standards. Students placed on Financial Aid Suspension will be ineligible for veteran educational