Hope Scholarships
By admin on October 11, 2011
What is a Hope Scholarship?
The Hope Scholarship is a tax credit aimed at making post-secondary education more attainable for everyone. The Hope Scholarship is a tax credit of $1800 available for the first two years of college.
Note that there are several programs that offer money for college under the name “Hope Scholarship”. The federally-funded Hope Scholarship is discussed here; however, be sure to check if additional Hope Scholarship funds are available in your state. For example, if you are a legal resident of Georgia, you may qualify for a HOPE (Helping Outstanding Pupils Educationally) Scholarship which covers tuition and fees for most programs of study, as well as $100 to help offset the cost of books and materials.
Hope Scholarship Requirements
Since the Hope Scholarship is not a traditional scholarship where funds are dispersed directly to the school, the Hope Scholarship requirements are a bit different. The scholarship is “awarded” to any tax paying individual, or their spouse or dependent who has attended a college or post-secondary institution at least half time. The Hope Scholarship Credit is a dollar-for-dollar match that allows the tax payer to essentially subtract the cost of attending college, up to $1,800, from their income. The tax credit is phased out for joint-filers earning between $80,000 and $100,000, or between $40,000-50,000 for single filers.
The Hope Scholarship Credit is available to offset the costs of attending a post-secondary institution, but may only be claimed for “qualifying” expenses. These expenses are generally considered tuition and fees at most colleges; however, do not include student activity fees, room and board, and other expenses that are charged by the school, but do not relate directly to education.
Applying for Hope Scholarship
Applying for the Hope Scholarship is perhaps the easiest scholarship you will ever apply for. While preparing your yearly income tax return, there is a section on the form to fill out to claim this tax credit. If you are a dependent, your parents or guardians will file for the Hope Scholarship and receive the funds. The Hope Scholarship credit may be claimed for each eligible student; however, the filer must decide whether to claim the Hope Scholarship, Lifetime Learning Credit, or the new American Opportunity tax credit as only one may be used per student per year.
Hope Scholarship Rules
To claim the Hope Scholarship tax credit, there are some rules to follow. First, the person claiming the credit must be enrolled at a qualified institution at least half time. The Hope Scholarship may only be claimed for two years, and may be only be claimed for the first two years of college. (There is an additional tax credit, the Lifetime Learning Credit, available for individuals who are past the first two years of college.)
The Hope Scholarship tax credit may not be claimed with the Lifetime Learning Credit, and may not be taken after the student has completed the first two years of college. Additionally, individuals who have been convicted of felony drug charges are unable to claim the credit at all.
Hope Scholarship Changes
For 2011 and 2012, the Hope Scholarship Credit has been replaced by the American Opportunity tax credit. Perhaps the most important difference between the Hope Scholarship Credit and the American Opportunity tax credit is that tax payers with little to no tax liability may be eligible to have money refunded directly to them. Under the Hope Scholarship credit, low-income families saw little benefit from the non-refundable tax credit because they did not earn enough to have a tax liability. Additionally, the American Opportunity tax credit is set to expire in 2012 unless Congress approves a measure to extend the benefit.
Another important change from the Hope Scholarship credit to the American Opportunity tax credit is that expenses for course related fees may now be claimed in addition to tuition and fees paid to qualified institutions. In the past, the Hope Scholarship only allowed tuition and fees paid to schools to be claimed towards the tax credit.
In recent years, the amount of the Hope Scholarship Credit had increased from $1500 to $1800 to reflect the rising costs of secondary education. Also in response to the rising costs of a college education, the Hope Scholarship Credit is not completely phased out until the tax filer has reached $60,000 for an individual or $120,000 for joint-filers. The American Opportunity tax credit has the same revised amounts.
