Cross-posted from the Treasury Notes.
By: Tim Geithner and Arne Duncan
Today, we will spend some time with students and parents at Wilson High School to talk about the critical link between education and our nation’s economy. As President Obama has said, education isn’t just a moral obligation—it’s an economic imperative. The nations that best educate their children today will be the nations that lead the global economy in the 21st century.
In order to have the best-educated workforce, we must help put college education within reach for all students and their families. And that’s even more important today as millions of Americans struggle to find work and make ends meet.
Since President Obama took office two years ago, our Administration has taken important steps to make college more affordable. We’ve provided assistance to local community colleges so they help their students find jobs when they graduate. We’ve taken the middlemen out of the student loan business and eliminated tens of billions of dollars in wasteful subsidies for banks while providing financial aid to families. And since 2009, we’ve been offering middle-class families the American Opportunity Tax Credit (AOTC)—a partially refundable credit of up to $2,500 a year for four years of college that helps cover the cost of college tuition and other education-related expenses.
An estimated 9.4 million students—our future scientists, entrepreneurs and teachers—will receive this benefit in 2011 to help make college more affordable. For parents and students struggling to pay rising tuition bills, or pay off mounting student debt, this partially-refundable tax credit will make a real difference. In fact, according to new Treasury Department analysis, the maximum available AOTC credit will cover about 80 percent of tuition and fees at the average two-year public institution and about one-third of tuition and fees at the average four-year public institution this year.
The credit was set to expire at the end of last year, but because the President fought to keep it alive, it was extended for another two years. That means in 2011 and 2012, college students will continue to be eligible for this important credit. This year alone, the Treasury Department estimates the AOTC will provide more than $18 billion in tax relief for the 9.4 million families with college students who are expected to claim it. And we’re pushing to make this tax credit permanent so that college students and their families can know with certainty that they can get up to $10,000 over four years of college.
Fifteen years ago, America’s young adults were more likely to earn a college degree than in any other country. Today, young adults in the U.S. are tied for ninth in the world in college attainment. On average, college graduates with a bachelor’s degree earn nearly twice as much over the course of their lifetime as workers with only a high school diploma. And the unemployment rate for college graduates with a bachelor’s degree today (around 5 percent) is currently about half that of all workers.
The United States has a long way to go before it lives up to the promise of education as the great equalizer. But to achieve that quintessential American promise, college must be within reach for hard-working families who want their children to pursue higher education to prepare for a globally competitive job market.
Tim Geithner is the Secretary of the Treasury and Arne Duncan is the Secretary of Education.