New Fund for Low-Income California Students Enables Donor Tax Breaks


California State Senator Kevin de Leon said the tax credit will provide the opportunity to increase college access for about 200,000 low-income students.California State Senator Kevin de Leon said the tax credit will provide the opportunity to increase college access for about 200,000 low-income students.

Californians have a week left to make the most of a newly-enacted tax incentive program expected to boost funding of the popular Cal Grant B Access Awards for low-income college students. Individuals and businesses who contribute to the new College Access Tax Credit Fund by the end of the year can take advantage of a tax credit equal to 60 percent of their donation.

That means a $1,000 donation to the fund enables a California taxpayer or firm to reduce his or her state tax bill by $600. The program continues as a 55 percent state tax credit in 2015 and a 50 percent state tax credit in 2016. In addition, taxpayers can deduct their donation as a charitable contribution on their federal income taxes.

California officials are predicting the College Access Tax Credit Fund may expand the Cal Grant B Access Award from $1,648 per student this academic year to as much as $3,000 to $5,000 over the next three years. The Cal Grant B Access Awards currently provide funds for nearly 197,000 low-income students and helps pay for books, housing, transportation, child care, and other costs related to attending college.

“As Californians, we have a new opportunity to increase college access and affordability for nearly 200,000 low-income students while saving on your taxes. … This tax credit is unlike any ever offered,” Calif. State Senator Kevin de Leon (D) said in a video statement.

De Leon, who is also the Senate President Pro Tempore in the California legislature, had sponsored the Senate legislation, which Governor Jerry Brown this past fall signed into law to authorize the College Access Tax Credit Fund program. The state is awarding up to $500 million in tax credits in 2014 and as of December 18 nearly $497 million in tax credits were still available.

“I challenge all Californians to contribute and make the future brighter by donating to the College Access Tax Credit Fund. … I know if it weren’t for financial aid programs like the Cal Grant program, I wouldn’t be here today” as a leader in the California senate,” de Leon said.

Audrey Dow, the vice president for external affairs and operations at The Campaign for College Opportunity organization, says the Cal Grant B Access Awards have been important for low-income students, especially for those enrolled in the state’s community colleges, but they haven’t kept up with inflation over the years.

“We know that so many of our college students, particularly community college students, are increasingly working full-time, managing school, job and family just to make ends meet. So [financial] aid has not always been sufficient for our community college students to be able to attend full-time and not have to work,” she explained.

“We know that students who go to school full-time are much more likely to complete than a student who goes part-time. And in California’s community colleges when only three in 10 students are completing after six years, we want to encourage more full-time attendance and making sure that an award amount is reflective of the true cost of living,” she said.

Dow noted that The Campaign for College Opportunity, a California-focused college access and success advocacy organization, had worked with De Leon in 2013 and 2014, along with other California groups, to help get the Senate bills necessary for establishing the new tax credit fund passed by the legislature. Since the fund became operational effective October 30, the organization has made efforts “to reach out and reach deep into [its] network to let (supporters) know that, if (they’re) looking to make some end-of-the-year donations and (they) care about higher education and want to see more student success across the board, this is a really good opportunity,” according to Dow.

“You get not only a California state tax credit but you also get a federal deduction for your contribution. So really it’s a win in many ways not just from a tax perspective but it’s a win for the state of California because it will have more [college] graduates,” she said.