Hope Scholarship Tax Credit

[NAP]

Hi!

I am just starting to think about wrapping up my first 60 credits into an AS degree at Excelsior College next year.

If I pay to enroll and continue to take CLEP exams only for credit (no classes), would I be eligible for the Hope Scholarship Tax Credit (to pay the enrollment and graduation fees)?

The part I am unsure of is the requirement to be enrolled and taking a part-time load. (I will be getting enough credits but not through classes.)

Does anyone have any experience with this?

Thank you very much for your help!

[perrik]

Oooooh, that's a tricky question for a Friday afternoon...

The Hope Credit is only applicable for the first two years of undergraduate work, and you must be enrolled at least half-time. I do not think you can take the Hope Credit based on exam fees because those are not paid directly to the institution in which you're enrolled. However, your enrollment and continuance fees at Excelsior should be eligible for education credits (EC mails out 1098-T forms in January).

Ask EC's financial aid office for their advice. The Hope credit is more $$$ than the Lifetime Learning credit, so let's hope that you can take it!

EDIT: Which reminds me... if you are enrolled in a school whose students are eligible for federal financial aid, you are entitled to take the Lifelong Learning credit! In January, the school will mail you a 1098-T form stating your eligible tuition for the tax year. Go grab Publication 970 from the IRS website for the details.

[NAP]

Thanks Perrik!

I do not want to be hoping for too much, but it sure would be nice to have those fees paid for.

I will ask Excelsior about this when I get a chance.

In the mean time, if anyone has more information about how/if this works at any of the Big 3 schools, please let me know.

[P00057870]

When you find out, please let the rest of us know the results.

Thanks,

Judy

[NAP]

Yes, of course I will post what I find out. I expect it to be very valuable information for all of us!

I just wanted to know - has anyone done this already?

[perrik]

My working assumption is that you will be unable to take the Hope credit for anything other than the mandatory enrollment costs because you are not paying tuition fees to the institution in which you're enrolled.

You can take the Lifelong Learning credit for the enrollment and annual fees at Excelsior. It's not much - you'll be able to claim a credit for 20% of the enrollment/annual fee and any course fees you pay to EC.

Hmm. The official rule for the Hope is that you must have been enrolled at least half-time for at least one academic period. I wonder... if you enrolled in three Excelsior courses in a calendar year, would that count as half-time for an academic period? Would you have to be enrolled in all three at the same time? But then, at $300 a credit hour, that's $2700 spent just to claim a tax credit of $1800, leaving your final cost for those 9 credits as $900, for which amount you could have racked up 30 CLEP credits (assuming a $20 proctoring fee along with the $70 CLEP fee).

Well, at least you can still take the Lifelong Learning credit, and you might be able to take the Hope credit for the enrollment fee for the associates degree.

[barbeque22]

go to IRS Form 1098-T : Keystone College

this includes the irs instructions for creating a 1098-t.

Unfortunately, credit by exam is not included.

Hope this helps!

Availability of financial aid works the same way as the tuition credit. TESC requires 6 credit hrs be completed (as courses) each quarter to receive financial aid. The IRS will use that...so 6 credit minimum per quarter...at least at TESC, even you know TESC considers full-time to be more than 24 hrs per year. You could probably appeal that to the IRS but it would take a lot of work.

[NAP]

Thanks to all for your help with this.

I guess I was hoping that there was something "special" about Excelsior or any of the Big 3 that once I enrolled and continued to accumulate credits through CLEP testing that it would be considered at least part-time enrollment to be eligible for the tax credit.

I'll try to write to them soon because I am really curious about it.

[NAP]

Hi!

I am just starting to think about wrapping up my first 60 credits into an AS degree at Excelsior College next year.

If I pay to enroll and continue to take CLEP exams only for credit (no classes), would I be eligible for the Hope Scholarship Tax Credit (to pay the enrollment and graduation fees)?

The part I am unsure of is the requirement to be enrolled and taking a part-time load. (I will be getting enough credits but not through classes.)

Does anyone have any experience with this?

Thank you very much for your help!

Just wanted to post an update –

It was hard to tell because I asked several questions, but I think the response I received from the financial aid office at EC to my question about the Hope Scholarship Tax Credit was to consult my accountant. (Of course, I do not have one, so I am back to trying to figure it out on my own.)

While I was waiting for a reply, I had read through the college application and saw this statement. “Students in examination-based programs, including the associate degrees in nursing, are not eligible for federal financial aid, but may qualify for institutional scholarships.” That may be the real answer to my question.

There are some other tax credits and deductions to consider, which may or may not be a better fit for this scenario.

American Opportunity Tax Credit
Lifetime Learning Tax Credit
Tuition and Fees Tax Deduction
Education Savings Bonds

If anyone gets more information about this, please let us know.

[NAP]

I am changing the topic slightly, so I decided to start a new post for this part.

In 2009, I was not enrolled in school and was taking only CLEP and DSST exams towards my first degree (as an individual, not through employment). I have looked at 4 tax breaks and was unable to find one that fits my situation. There are more in-and-outs to each, but here are the requirements I looked at in Publication 17:

Hope Scholarship Tax Credit –

1. “Student must be enrolled at least half time for at least one academic period beginning during the tax year.”

2. “Tuition and required enrollment fees, including amounts required to be paid to the institution for course-related books, supplies, and equipment.”

American Opportunity Tax Credit –

1. “Student must be enrolled at least half time for at least one academic period beginning during the tax year.”

2. “Tuition and required enrollment fees. Course-related books, supplies, and equipment do not need to be purchased from the institution in order to qualify.”

Lifetime Learning Tax Credit –

1. “Available for one or more courses”

2. “Tuition and required enrollment fees, including amounts required to be paid to the institution for course-related books, supplies, and equipment.”

Tuition and Fees Tax Deduction -

1. “A student enrolled at an eligible educational institution...”

2. “Tuition and fees required for enrollment or attendance...” and “Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.”

If anyone has found a tax benefit for taking exams (fees and/or books) while not being enrolled, please let us know.

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