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Date Submitted: 11/18/2012 08:16 AM

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Sha’Dae Forbes

ECN 2020

Article #1

The recent article that I read from The Washington Post was “Obama calls for extending tax break for college students.” President Obama is trying to extend the American Opportunity Tax Credit, which provides a great deal of financial assistance for the mid-class families to pay for college tuition. This tax credit is to provide up to $2,500 a year per student for college expenses. Unlike the current the Hope Credit and Lifetime Learning Credit, this new tax credit does not limit students to qualify for only their first two years of college. It also expands to families that earn up to $180,000 a year to apply for the American Opportunity Tax Credit. With this tax credit expiring in January, Obama is working on getting Congress to make this a permanent benefit for college students. Congress is not showing that they are interested in extending the program due to the fact that they have to cover $58 billion cost to expand it for over the next decade. With more jobs becoming available that require higher education, officials are hoping that the credit be part of the discussion after the midterm elections.


After recently going over positive and negative externalities so far this semester, the article I read in The Washington Post shows how this decision can affect so many people either positively or negatively without being directly involved in the situation. These externalities were discussed in Chapter 5 this semester. If Congress decides to expand this tax credit to college students, the positive externality will be that there will be more people that can better educate themselves to hold a long term career and be financially successful. Also with more jobs becoming available and having higher educated individuals, this may help the unemployment rates to decrease and maybe stimulate our economy.

Congress’ decision can take another turn and decline the request to expand the credit which can leave a negative...