E C O N O M I C R E P O R T O F T H E P R E S I D E N T

years ago. In 2000, 13.1 million students—5.9 million receiving HOPEScholarships and 7.2 million claiming the Lifetime Learning credit—areeligible to benefit. The budget for HOPE Scholarships in fiscal 2000 wasapproximately $5 billion. Each HOPE Scholarship provides a tax credit ofup to $1,500 for each of the first 2 years of college for students enrolled onat least a half-time basis. This credit is phased out for joint tax filers withincomes between $80,000 and $100,000, and for single filers makingbetween $40,000 and $50,000. By reducing the financial barriers tocontinued education, the President hopes to make the first 2 years ofcollege as universal as high school.In addition, the 2000 Federal budget provides $7.6 billion for Pellgrants, a program that provides direct financial assistance to help financiallyneedy students pay for their postsecondary education. The maximumaward was increased 43 percent between 1993 and 2000, from $2,300 to$3,300.To further these goals, the President’s 2001 budget proposes a $30billion investment in the form of a college opportunity tax cut. Thisinitiative would offer a 28 percent tax credit for higher education expensesand would set higher income thresholds than do existing education taxcredits. Unlike with the HOPE Scholarship, there would be no limit onthe number of years in which a student could claim the credit. When fullyphased in, the credit would cover $10,000 in expenses.The Lifetime Learning tax credit targets adults who want to go back toschool, change careers, or take courses to upgrade their skills, as well ascollege juniors and seniors and graduate and professional degree students.The 20 percent credit applies to the first $5,000 of a family’s qualifiededucation expenses through 2002 and to the first $10,000 thereafter, and itphases out at the same income levels as the HOPE Scholarship. The fiscal2000 budget for this credit was $2.4 billion.Student loans have opened the doors to college for millions of Americans.In 1993 the President established the direct student loan program toreduce costs and increase efficiency in the Federal Government’s studentloan programs and to offer expanded benefits to borrowers. The programoffered students the option of income-contingent repayment: installmentswere based in part on the borrower’s income after completing studies. Inthe Higher Education Amendments of 1998, the Administration proposedand obtained significantly lower interest rates for borrowers on studentloans, easing the burden of repayment for new borrowers and for borrowerswho consolidate their loans.156 | Economic Report of the President