Thank you for visiting NationalApplicationCenter.com.

If you are seeing this message, you are doing so for one of several reasons:

  1. You are using a text based browser
  2. You are viewing this site on a web-enabled cell phone
  3. You are using an outdated browser which doesn't fully support Cascading Style Sheets (CSS)

If you fall into the third category, you'll need to upgrade your browser to view NationalApplicationCenter.com the way it was intended to be viewed.

To make your life a little simpler, here are some links to CSS compliant browsers:

Any one of these browsers properly supports the CSS used on this site and will allow you to view this site as intended.

National Application Center :: save for college

Plan, explore, and apply to college using these great tools.
tax incentives

What about tax incentives for savers?

Hope Scholarship Credit (HSC)

  • Tax credit up to $1,500/year for each student
  • 100% tax credit for the first $1,000 paid for qualified expenses. 50% tax credit for the second $1,000.
  • You may claim HSC for two years. Student must be in first or second year and enrolled at least half time for one period of the tax year.
  • Covers tuition and fees.
  • You qualify by paying tuition and fees for yourself (if independent), your spouse, or your dependent child.
  • Student activity fees, athletic fees and other expenses do not count toward your credit.
  • Grants and scholarships will reduce the tuition and fees used to determine your credit.
  • Eligibility decreases for modified adjusted gross incomes (AGIs) between $40,000 - $50,000 (filing single) and $80,000 - $100,000 (married, filing jointly). Cannot claim with modified AGIs above these limits.
  • You benefit from tax credits only to the extent you owe federal income tax. If you don't owe taxes, you won't receive a tax credit.

Lifetime Learning Credit (LLC)

  • May save you up to $1,000/year in federal taxes.
  • 20% tax credit for the first $5,000 paid for qualified expenses. After 2002, a 20% tax credit on the first $10,000 paid.
  • No limit on number of tax years you may claim LLC.
  • Covers tuition and fees.
  • Available to college juniors, seniors, graduate and professional students - and to students taking individual classes to improve job skills
  • You qualify by paying tuition and fees for yourself (if independent), your spouse, or your dependent child.
  • Student activity fees, athletic fees and other expenses do not count toward your credit.
  • Grants and scholarships will reduce the tuition and fees used to determine your credit.
  • Eligibility decreases for modified adjusted gross incomes between $40,000 - $50,000 (filing single) and $80,000 - $100,000 (married, filing jointly). Cannot claim with modified AGIs above these limits.
  • You benefit from tax credits only to the extent you owe federal income tax. If you don't owe taxes, you won't receive a tax credit.

Education IRAs

  • You may deposit up to $500/year into an IRA for a child under age 18.
  • Parents, grandparents, other family members, friends, and the child may contribute to the IRA as long as the total contribution per year does not exceed $500.
  • Eligibility to contribute is reduced with a modified adjusted gross income between $95,000 - $110,000 (filing single) and $150,000 - $160,000 (married, filing jointly). Cannot contribute if income is above these amounts.
  • IRA grows tax-free until distributed. A child will not owe tax on any IRA withdrawal if the child's expenses at the institution equal or exceed the amount withdrawn.
  • NOTE: You can only claim one tax credit or contribute to one education IRA per student per tax year.

Student loan interest deduction

  • Parents and independent students may deduct interest on loans borrowed to meet college expenses.
  • Deduction is for interest payments made during the first 60 months (5 years) in which interest payments are required.
  • Deduction diminishes for modified gross income between $40,000 - $55,000 (single filers) and $60,000 - $75,000 (married, filing jointly). Cannot deduct if income is above these amounts.
  • Maximum deduction in 1999, $1,500; in 2000, $2,000; 2001 and beyond, $2,500.
  • You are not required to itemize to receive the deduction.
  • Dependents may not claim the deduction.
  • Married couples must file jointly to receive the deduction.

Using IRA withdrawals for college costs

  • You may withdraw from an IRA to pay higher education expenses for yourself, your spouse, your child or grandchild.
  • You will owe federal income tax on the amount withdrawn, but will not be subject to the 10% early withdrawal penalty.