Representative Jim McDermott Introduces
Legislation to Improve Access to Education
For Immediate Release - October 7, 2003

Washington, DC - Today Reps. Jim McDermott (D-WA), George Miller, Robert Matsui, and Dale Kildee introduced the Personal Access to Continued Education Act (PACE), HR 3251, to make higher education more accessible and affordable.

More than ever before, education is key to our economic success, national security and civic strength. Unfortunately, as the economy continues to experience crippling job losses, too many students and workers seeking retraining don't have access to affordable higher education. Adult and non-traditional students are now the fastest growing segment of college students and most return to school so they can successfully re-enter the workforce.

"It takes more than theories and happy talk to get our economy back on track. We need to increase American's access to education and assist them in finding the tools to be more competitive in the global marketplace. The PACE Act reaches out to people who desperately want to qualify for good jobs," McDermott said.

Among the bill's provisions, Rep. McDermott's PACE Act would amend the Hope Tax Credit to by allowing more flexibility to students who study part time, increasing the tax credit and streamlining the Hope and Lifetime Learning credits into one easy to understand and use program.

McDermott continued, "Our workers need to be as prepared for the 21st century as our armed services are - we must have the best trained and best equipped workforce in the world."

Current Law

The Hope Tax Credit (Hope) provides a one-dollar tax credit for every dollar spent on qualified tuition, up to $1,000. It provides a fifty-cent tax credit for every dollar spent on tuition above $1,000. The maximum Hope credit is $1,500. The Hope credit is limited to students that attend school at least part-time, and only student in their first two years of higher education can qualify for the credit. Any Pell or Supplemental Educational Opportunity Grants offset the amount of the Hope tax credit.

The Lifetime Learning Tax Credit (LLC) provides a 20-cent tax credit for every dollar spent on qualified tuition of up to $10,000. The maximum Lifetime Learning tax credit is $2,000. LLC is available for an unlimited number of years and students do not need to be attending school half-time or more to claim the credit.

Both of these tax credits are non-refundable, which means that low-income families, who have low tax liability, generally do not qualify for the rebate. Further, non-traditional students, such as working parents, cannot qualify for either of these tax credits or federal student aid unless they are attending school at least part-time. Very few working students with children are able to attend school full-time or even part-time. Current law fails to meet the growing needs of students and workers who have been laid off, who are seeking to gain the advanced skills that they need to be successful in the workforce.

PACE Act

The PACE Act captures the best features of both the Hope and the Lifetime Learning Tax Credits. The PACE Act would increase the Hope credit to $2,000; amend the Hope Credit to allow a dollar credit for every dollar spent on qualified tuition, fees, and books for the first $1,500; make the credit refundable; allow students who are studying less than part-time to claim the credit; allow students and families to claim the credit for all years of higher education; and, repeal the current reduction against qualified expenses of Pell and Supplemental Education Opportunity Grants.