Bill Reduces Colleges' HOPE Scholarship Requirements

Colleges with a large number of low-income students are getting a break from the federal government — a reduction in costly paperwork requirements that had threatened to put a strain on postsecondary education budgets.
The Senate late last month joined the House of Representatives in approving legislation that would simplify colleges' paperwork burdens under the HOPE Scholarship and lifelong learning tax credit, two tax benefits aimed at low- and middle-income students. The House approved the measure Dec. 4.
Despite support for the new tax credits, colleges have opposed some of the two programs' paperwork requirements since shortly after enactment of the programs in 1997. Of particular concern was a provision that colleges report detailed information on students and their parents in order to help the federal government monitor fraud in the program.
For example, colleges by law have been required to collect the names and Social Security numbers of parents who may claim a HOPE-eligible student as a dependent. The original law also required colleges to collect detailed information about who pays for a student's tuition and fees.
Mindful of colleges' concerns, the Internal Revenue Service put off implementing these requirements, and the congressional action now clears the way to remove the rules.
"While these changes may seem minor, I can assure my colleagues that they will greatly reduce the administrative burdens on our colleges and universities," says Rep. Kenny Hulshof, R-Mo., a co-sponsor of the bill.
Noah Brown, federal relations director for the Association of Community College Trustees, says having colleges monitor HOPE compliance is "like asking a restaurant to send all its lunch receipts to the IRS" to help track business meal expenses. "It's an onerous requirement."
The IRS also found that it can match a student's Social Security number to his or her parent, leaving little need for colleges to collect a parent identification number as well.
In 1999, 3.3 million students claimed the HOPE credit, which is open to students in the first two years of college, Hulshof says. Another 3.57 million students claimed a lifelong learning credit, which is equal to 20 percent of tuition for juniors and seniors or those returning to school.