College and the Tax Bill

The final version of the tax bill has some changes to the education-related items that caused a bit of an uproar in previous versions. Here is a quick summary:

  • Up to $2,500 in student loan interest remains tax-deductible (no change from current policy)
  • The three education tax credits– American Opportunity, Lifetime Learning and Hope– remain the same. (It had been proposed to do away with all but the AOTC.)
  • Tuition waivers (for graduate students and employees of colleges and universities) remain untaxed.
  • Parents may use up to $10,000 annually from 529 plans to pay for private K-12 school tuition. (Under current law, only Coverdell ESA accounts could be used for K-12 expenses. The previous drafts of the bill included discontinuing the Coverdell ESA, which is logical since this change eliminates the ESA’s primary benefit; however, I have not been able to find any specifics on that.)

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