Federal Grants and Tax Benefits
Federal Pell Grants
A Federal Pell Grant, unlike a loan, does not have to be repaid. Pell Grants are awarded on the basis of federal methodology to undergraduate students who have not earned a bachelor's or professional degree. Pell Grants are considered a foundation of federal financial aid, to which aid from other federal and nonfederal sources may be added.
The maximum Pell Grant award for the 2016-2017 award year is $5,815. The maximum can change each award year and depends on program funding. The amount awarded will depend not only on financial need but also on the cost of attendance, enrollment as a full-time or part-time student, and attendance at school for a full academic year or less.
If eligible, student accounts will be credited dividing the annual award equally between the fall and spring terms.
Federal Supplemental Educational Opportunity Grants (FSEOG)
The Federal Supplemental Educational Opportunity Grant (FSEOG) program is for undergraduates with exceptional financial need. Pell Grant recipients with the expected family contributions (EFCs) of zero will be considered first for a FSEOG. Just like Pell Grants, the FSEOG does not have to be repaid.
The maximum annual SEOG is $4,000, depending on when you apply, financial need, College awarding policies, and available funding.
If eligible, student accounts will be credited dividing the annual award equally between the fall and spring terms.
Federal Veterans Benefit Information
Post 9/11 Veterans Education Assistance Act of 2008
This law established a program at the U.S. Department of Veterans Affairs to provide benefits for veterans of the Iraq and Afghanistan conflicts. The program provides benefits for up to four years based on a proportional calculation of 36 months of duty for up to four academic years' of annual assistance. The maximum award for the Post -9/11 GI Bill program under Chapter 33 is $21,084.89 for the 2015-2016 academic year. This program also provides veterans enrolled full-time a monthly housing allowance based on military housing benefit rates and an annual stipend of $1,000 for books and supplies.
Only individuals entitled to the maximum benefit (based on service requirements) are eligible to receive this funding. A student or eligible dependent may be eligible if the veteran:
served an aggregate period of active duty after September 10, 2001 of at least 36 months,
was honorably discharged from active duty for a service connected disability and served 30 continuous days after September 10, 2001,
has a dependent eligible for Transfer of Entitlement under the Post-9/11 GI Bill based on a veteran's service under the eligibility criteria listed above. For transfer of benefit policy and information can be found at on the Department of Defense website.
More information about the Post 9/11 Veterans Assistance Act of 2008 is available here.
Yellow Ribbon Education Enhancement Program
Iona College participates in the U.S. Department of Veterans Affairs' new GI program. By enrolling in the Yellow Ribbon GI Education Enhancement Program and providing additional scholarships that are matched by the government, the College is able to offer full tuition benefits to 20 qualifying veterans of the Iraq and Afghanistan conflicts. The Yellow Ribbon GI Education Enhancement Program (Yellow Ribbon Program) is set up by a provision of the Post-9/11 Veterans Educational Assistance Act of 2008, which is described above.
As a participant in the Yellow Ribbon Program, Iona College will meet 50 percent of charges remaining after the base maximum of tuition benefit. Because the program provides dollar-for-dollar matching funds for any voluntary tuition support by schools where tuition costs more than the base amount, qualified veterans or their eligible dependents, can attend Iona College with all tuition paid. Only individuals entitled to the maximum benefit rate (based on service requirements) are eligible to receive this funding.
Benefits are available for training for qualifying veterans accepted to a degree program at the College. Applications are considered on a first-come first-served basis, and you must complete an application to notify us of your interest in the Yellow Ribbon Program.
Montgomery GI Bill Active Duty (Chapter 30)
The Montgomery GI Bill program provides up to 36 months of education benefits payable for 10 years following release from active duty. This benefit may be used for degree and certificate programs. Remedial, deficiency, and refresher courses may be approved.
Montgomery GI Bill Selected Reserve (Chapter 1606)
This program provides up to 36 months of education benefits to members of the Selected Reserve, including the Army, Navy, Air Force, Marine Corps, and Coast Guard Reserves, and the Army and Air National Guard. This program does not require active duty service to qualify.
Reserve Educational Assistance Program (Chapter 1607)
REAP is an education program that provides up to 36 months of education benefits to members of the Selected Reserves, Individual Ready Reserve (IRR), and National Guard who are called to active service. The educational assistance allowance payable under REAP is a percentage of the Montgomery GI Bill rate based on the number of continuous days served on active duty.
Veterans Educational Assistance Program (Chapter 32)
VEAP is available if you first entered active duty between January 1, 1977, and June 30, 1985, and you elected to make contributions from your military pay to participate in this education benefit program. Your contributions are matched on a $2-for-$1 basis by the government.
Survivors' and Dependents' Educational Assistance (Chapter 35)
This program provides education and training opportunities to eligible dependents of certain veterans who died or are permanently and totally disabled as the result of a service-connected disability. The program offers up to 45 months of education benefits. Spouses have 10 years from the date the VA establishes eligibility to use the benefit. Surviving spouses of veterans who died while on active duty have 20 years from the date of the veteran's death to use the benefit. Children may use the benefit while they are between the ages of 18 and 26.
Federal Tax Benefits
The federal government provides a number of tax incentives that can help defray the cost of higher education. These incentives come in the form of:
Tax credits, which directly reduce the amount of tax you are liable for; and
Tax deductions, which reduce the amount of income that you pay taxes on.
You may qualify to use more than one of the benefits, but there are some restrictions against this as well. All of the tax credits and deductions are means tested and phased out at high income levels. We recommend that a tax expert be consulted to determine available benefits.
Detailed information can be found on the Internal Revenue Service website.
Under the American Recovery and Reinvestment Act (ARRA), more parents and students qualify for a tax credit, the American opportunity credit, to pay for college expenses.
The American opportunity credit originally modified the existing Hope credit for tax years 2009 and 2010, and was later extended for an additional two years - 2011 and 2012, making the benefit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. Read More »
The Hope credit generally applies to 2008 and earlier tax years. It helps parents and students pay for post-secondary education. The Hope credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. The Hope credit you are allowed may be limited by the amount of your income and the amount of your tax.
The Hope credit is for the payment of the first two years of tuition and related expenses for an eligible student for whom the taxpayer claims an exemption on the tax return. Normally, you can claim tuition and required enrollment fees paid for your own, as well as your dependents' college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time.
You cannot take both an education credit and a deduction for tuition and fees for the same student in the same year. In some cases, you may do better by claiming the tuition and fees deduction instead of the Hope credit. Read More »
The lifetime learning credit helps parents and students pay for post-secondary education.
For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the lifetime learning credit can be claimed for each student. However, a taxpayer cannot claim both the Hope or American Opportunity credit and Lifetime Learning credits for the same student in one year. Thus, the lifetime learning credit may be particularly helpful to graduate students, students who are only taking one course and those who are not pursuing a degree.
If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means that, for example, you can claim the Hope or American opportunity credit for one student and the lifetime learning credit for another student in the same year. Read More »
How to Claim Tax Credits
Education credits are claimed on IRS Form 8863. For details on these and other education-related tax breaks, see IRS Publication 970, Tax Benefits of Education. Read More »
You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education.
The tuition and fees deduction can reduce your taxable income by as much as $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A of Form 1040. This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high.
You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax.
Generally, you can claim the tuition and fees deduction if all three of the following requirements are met:
You pay qualified education expenses of higher education.
You pay the education expenses for an eligible student.
The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return.
You can't claim both an education credit and the tuition and fees deduction for the same student for the same year, but you can take the deduction for one student and a credit for another.
Calculate and claim your tuition and fees deduction on IRS Form 8917 - Tuition and Fees Deduction. Read More »
Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $75,000 ($150,000 if filing a joint return), there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments. Read More »
The student loan interest deduction is taken as an adjustment to income, which means you can claim this deduction even if you do not itemize deductions on Schedule A of Form 1040.
This is a loan you took out solely to pay qualified education expenses that were:
For you, your spouse, or a person who was your dependent when you took out the loan.
Paid or incurred within a reasonable period of time before or after you took out the loan.
For education provided during an academic period for an eligible student.
Read More »
You will receive information about your annual educational expenses in a 1098-T statement. Schools are required to send this information to each student and to the IRS by January 31 each year. Iona College students can sign up to receive this form electronically or by mail to the home address of record. The student will be emailed each calendar year with the link to sign up for electronic delivery of the 1098-T, if desired. Iona College, like most schools, reports charges and awards posted to the student account for the tax (calendar) year. We do not report on the basis of payments made.
Sign up for electronic delivery of your 2015 1098-T form.
Remember it is wise to consult with a tax professional when calculating and claiming tax credits or deductions to ensure eligibility and to maximize whatever benefits may be available to you.