What's the Difference Between the American Opportunity Credit and the Lifetime Learning Credit?

Both the American Opportunity Credit and the Lifetime Learning Credit can help offset the cost of higher education, but they cover different students and situations. The American Opportunity Credit is worth up to $2,500 per year and is available for the first four years of college for a student enrolled at least half-time in a degree program — and up to $1,000 of it is refundable. The Lifetime Learning Credit is worth up to $2,000 per tax return and can be used for any number of years of higher education, including graduate school and professional courses, even if the student isn't pursuing a degree. The American Opportunity Credit is generally more valuable when you qualify for it, but the Lifetime Learning Credit is the option for graduate students, part-time learners, and people taking courses to improve their job skills. Both credits phase out at higher income levels.