Worcester State University
Financial Aid

 
Alternatve Financing & Tax Credits


In addition to need-based financial aid there are several programs you may want to consider to supplement you financial aid award or to assist you if you so not qualify for need-based assistance.  These programs may be used to finance all or part of the total cost of attendance.

Tuition Payment Plan

Worcester State University participates in a tuition payment plan offered through Academic Management Services, Inc. The plan offers the family a low-cost, flexible method of paying for educational expenses by prorating these costs over 10 months. This is not a loan program. Additional information may be obtained from AMS, 1 AMS Place, Swansea, MA 02777 or by calling 1-800-635-0120 or by contacting our Bursar’s Office at (508) 929-8012.

Tax Credits

Lifetime Learning Tax Credit

The Lifetime Learning credit is a tax credit available to individuals who file a return and owe taxes. This means the amount of the credit is subtracted from the taxes your family owes, rather reducing taxable income like a tax deduction does. You can’t get a refund for the Lifetime Learning Tax credit id your family doesn’t pay taxes. If your family owes less in taxes than the maximum amount of the Lifetime Learning tax credit for which your family is eligible, you can only take the credit for the amount you owe in taxes.

Your family may claim a tax credit up to $1,000 per tax year (until January 1, 2003) and up to $2,000 (after that date) for the taxpayer, taxpayer’s spouse, or any eligible dependents for an unlimited number of tax years. A family may claim up to 20% of $5,000 or eligible expenses for expenses paid after June 30, 1998, and prior to January 1, 2003, and up to 20% of $10,000 of eligible expenses (for expenses paid after January 1, 2003, and after).

The actual amount of credit depends on your family’s income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. This credit is family-based (e.g., $1,000 per family) rather than based on the number of dependents in your family like the Hope Credit.

Hope Scholarship Tax Credit

The Hope Scholarship is a tax credit, not a scholarship. Tax credits are subtracted from the tax your family owes, instead of subtracting them from taxable income like a tax deduction. Your family must file a federal tax return and owe taxes to get this tax credit. You can’t get a refund for the Hope credit if your family doesn’t pay taxes. If your family owes less in taxes than the maximum amount of the Hope tax credit for which your family is eligible, you can only take the credit for the amount you owe in taxes.

Your family may claim a tax credit up to $1,500 for each eligible dependent for up to two tax years. In other words, your family may claim up to 100% if the first $1,000 of eligible expenses and 50% of the next $1,000 for a maximum credit of $1,500.

The exact amount of the Hope credit depends on your family’s income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. The total credit is also based on how many eligible dependents are in your family, rather than a maximum dollar amount for the family, like the Lifetime Learning tax credit.

Who Qualifies?

The Taxpayer: An eligible taxpayer must file a tax return and owe taxes to claim the Hope credit. In addition, the taxpayer must claim an eligible student as a dependent on the tax return, unless the credit is for the taxpayer or the taxpayer’s spouse. (This means the eligible taxpayer may also be the eligible student). Taxpayers may be eligible for the largest credit with an Adjusted Gross Income (AGI) of up to $40,000 for a single taxpayer or $80,000 for married taxpayers. The credit amount is gradually reduced for families with incomes between $40,000 and $50,000 if single or between $80,000 and $100,000 is married.

The Student: The tax law says an eligible student must be enrolled at least one-half time in an eligible program leading to a degree or certificate at an eligible school during the calendar year AND must not have completed the first two years of undergraduate study. You may claim the credit yourself if you are not claimed as a dependent by another taxpayer. (Once again, this means that the eligible student may also be the eligible taxpayer). Also, you may not have been convicted of a Federal or State felony drug offense before the end of the tax year in which you are enrolled.

Can A Family Claim Multiple Benefits?

A family may claim a Hope credit, a Lifetime Learning credit and an exclusion from gross income for certain distributions from qualified State tuition programs or education IRAs as long as the same student isn’t used as the basis for each credit or exclusion AND the family doesn’t exceed the Lifetime Learning maximum per family.

How Do You Get It?

To apply for the credit, the taxpayer must report the amount of tuition and fees paid as well as the amount of certain scholarships, grants, and untaxed income used to pay the tuition and fees. The law specifies that schools will send this information in the form of a "return" to individual taxpayers and to the IRS. For the 2000 tax year, this return will include: 1) the name, address, and taxpayer ID number of the school; 2) the name, address, and taxpayer ID of the student for whom tuition was paid; 3) whether the student was enrolled at least half-time; and 4) whether the student was enrolled only in a graduate-level program. Your school will mail this to you by January 31, 2001 for the 2000 tax year. This "return" from the school will also include the phone number of a person you can call at the school if you have questions. You will use this information and your own records about tuition and fee amounts you paid to fill out the IRS Form 8863 to claim the tax credit. You may wish to talk to a tax advisor for help in calculation the amount of your credit.

When Is It Available?

The taxpayer may claim the Hope credit or Lifetime Learning Tax Credit for qualified expenses paid in tax years beginning July 1, 1998, and after, for education furnished in academic periods beginning on or after this date.

Taxpayers may pay educational expenses in a tax year for an academic period that begins following the tax year (e.g. paying in December 2000 for an academic period beginning in the first three months of 2001). Because the law did not take effect until January 1, 1998, you were not allowed to prepay for the first year of the credit.

Copyright 1998, National Association of Student Financial Aid Administrators
Permission to reprint, distribute, and/or post on web sites is granted to NASFAA Members.

 
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