By Vicki Needham - 08/09/10 08:43 PM EDT
Earlier this year, Obama signed a bill that saves billions in subsidies that were going to private lenders, estimated at about $60 billion over the next 10 years. The savings come by eliminating the middleman and letting the Education Department grant all federally backed student loans.
Obama also pushed to make permanent a temporary tax credit that's worth $2,500 a year for two years of college for individuals making less than $80,000 year and couples making $160,000 or less.
"We're tripling how much we're investing in the largest college tax credit for our middle-class families," Obama said. "That tax credit is now worth $2,500 a year for two years of college. And we want to make it permanent, so it's worth $10,000 over four years of college — $10,000."
Created under the economic stimulus in 2009, and effective through the end of the year, the American Opportunity tax credit provides taxpayers with a credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid, plus 25 percent of the next $2,000, according to the IRS.
Taxpayers will be able to reduce their tax liability one dollar for each dollar of credit that they are eligible for, up to $2,500.