Lifetime learning credit

Lifetime learning credit

Host : Weren't there other education credits?

David : Yes. Another one is called the lifetime learning credit. This credit has wider applicability than the Hope credit. The Hope credit only applies for the first two years of college, and you have to be enrolled on at least a half-time basis.

As the name implies, you can qualify for the lifetime learning credit throughout your life, and you might qualify even if you're taking only one night course per semester to improve your job skills.

Host : This sounds good so far...

David : Yes, it is more flexible than the Hope credit, but it's not nearly as good monetarily. The lifetime learning credit only gives you a credit worth 20 percent of your tuition costs.

Let's say you're taking a few night courses, and spend $1,000 on tuition. The 20 percent credit means you'll only reduce your tax liability by $200.

And again, this credit phases out over the same income ranges as the Hope credit.

Finally, I discuss EE savings bonds in my tape on bond investing, but if you claim a Hope or lifetime learning credit, you now can't use the college education benefits associated with EE savings bonds. With this change, and baring any change in the interest yield on EE bonds, I can't recommend savings bonds for anyone, at any time.