American Opportunity Tax Credit

In 2009 President Obama signed the American Recovery and Reinvestment Act; this legislation includes additions to the American Opportunity Tax Credit, which provides a maximum $2,500 tax credit for qualifying tuition and other college expenses. Forty percent of the $2,500 maximum is tax-refundable. Your modified adjusted gross income must be less than $80,000 (or $160,000 if married, filing jointly) to qualify for the credit.

Pell Grant Increases

The Patient Protection and Affordable Care Act that President Obama signed in March 2010 affected student loans as well as health care. The maximum amount of Pell Grants will increase with inflation for the five academic years between 2013 and 2018, reaching a total of $5,975 by 2020; this increase will not keep up with increases in tution over the same time, but some families will save $1,700.

Income-Based Repayment Plans

Beginning on July 1, 2014, students who take out federal loans for education will pay back their loans based on income rather than the size of their debt, and the government will forgive outstanding loan balances after 20 years instead of 25. This shift from the current system is also a result of the health care reform bill that President Obama signed in March 2010. Though not a grant, these new plans will make student debt more manageable.

Budget Problems

In a Huffington Post article published in February 2011, financial aid expert Mark Kantowitz wrote that federal college funding will not increase dramatically during the remainder of the Obama administration; instead, Congress and the President will redistribute current funding amounts as they construct a new federal budget that requires cuts. In the same article Kantowitz claimed that President Obama's priorities would involve preserving Pell Grant maximums at the expense of subsidized interest on some other federal aid loans.