University Times

It may be a first in the history of tuition billing at Pitt: The Student Accounts office is encouraging some students to delay paying their spring tuition bills until after the official deadline, so those students can take advantage of a new federal tax break.

Student Accounts estimates that nearly 11,000 undergraduates at Pitt's five campuses may be eligible for the Hope Scholarship, a new tax credit that's part of the recently enacted Taxpayer Relief Act of 1997.

Effective Jan. 1, 1998, undergraduate students in their first and second years will be eligible for a Hope Scholarship tax credit worth up to $1,500 a year. The credit is worth 100 percent of the first $1,000 spent on tuition and fees, and 50 percent of the next $1,000.

The estimate that 11,000 Pitt students may be eligible for the credit is based on the number of undergraduates who are enrolled at least half-time at Pitt and who have not yet completed half of the credits required for their degrees.

To enable these students and their families to take advantage of the Hope Scholarship, Pitt will allow them to delay paying their spring 1998 tuition bills until Jan. 12 without incurring a late fee. That's about a month after the normal deadline.

A letter, inserted in the 11,000 students' spring term bills this week, points out: "We normally mail our spring term bills to all registered students in November, with a due date of Dec. 17…However, because the Hope Scholarship credit is not effective until Jan. 1, 1998, payments made prior to that date would not qualify for the tax credit. Therefore, the University of Pittsburgh has elected to modify our 1998 spring term invoice payment procedure to assist those students or families who may qualify for this tax credit." Students who don't receive the letter, but who believe they qualify for the Hope Scholarship, may call Student Accounts at 624-7575 to request an extension of the deadline for paying their spring tuition, said Student Accounts manager Robert Lech.

Most Pitt students who don't qualify for the Hope Scholarship will be eligible for another new tax credit provided under the Taxpayer Relief Act of 1997.

After July 1, 1998, all part-time students, graduate students and full-time undergraduates in their third and fourth years will be eligible for a "lifelong learning" tax credit. The credit is worth up to 20 percent of the first $5,000 paid each year through the year 2002, and up to 20 percent of the first $10,000 thereafter.

"As long as these students [part-timers, graduate students and third- and fourth-year undergrads] can justify claiming that they are taking classes to better themselves, they should be eligible for the lifelong learning credit," Lech said.

While praising the Taxpayer Relief Act for providing nearly $40 billion in new tax breaks for students and their families, higher education officials complain that the U.S. Treasury Department is putting the burden on colleges and universities to provide information on their students and students' families to the Internal Revenue Service.

"It's a headache, there's no doubt about it," Lech said. "The [Taxpayer Relief] Act states that we are going to have to start gathering new kinds of information on our students and report that to the IRS." Universities will be required to report the Social Security numbers of each student and their parents or others who file taxes on the students' behalf, among other data.

"We have to collect this information from every student at the University of Pittsburgh, not just those students who qualify for the tax credits," Lech noted. Logistics for collecting the data have not yet been determined.

"One of the big problems for us is that the IRS hasn't given definite directions to the universities yet," Lech noted. It remains unclear, for example, how to classify students who have transferred from another university, who qualify for advanced academic standing, or who dropped out years ago and have resumed their studies, higher education leaders point out.

"Fortunately, the IRS has indicated they will be lenient with us [colleges and universities] this year. They won't fine us if we don't have this information collected by January," Lech said.

He advised students and their families to consult the IRS or professional tax advisers for details about eligibility for the new tax breaks.

— Bruce Steele