During January and February of each year, students from across the UA campus enroll in the SaveFirst Poverty in America course (UH 331/ MGT 491), in which undergraduate and graduate students discuss and reflect upon perceptions and misperceptions of individuals living in poverty and offer free tax-preparation services to low-income, working families who qualify for the Earned Income Tax Credit.
Students who participate in SaveFirst often interact with individuals and families with backgrounds very different from their own, an experience that offers them new perspectives on those living in poverty.
In addition to providing tax-preparation services, undergraduate, graduate and law students offer financial literacy information and opportunities for savings and investments to low-income families. Goals of the SaveFirst initiative include ensuring low-income individuals receive the full Earned Income Tax Credit and other credits for which they are entitled, counteracting predatory lending practices and encouraging long-term financial planning and asset building. The Earned Income Tax Credit, or EITC, is the federal government’s largest anti-poverty program supporting low- to moderate-income working families. The EITC reduces the tax burden on low-income workers and provides an incentive for individuals, especially single mothers, to find work.
The Poverty in America course centers on some of the most engaging contemporary scholarship on issues of poverty, including perceptions and misperceptions of race and poverty and policies aimed at assisting the working poor.
“The SaveFirst service-learning initiative cultivates a willingness and desire in students to take responsibility for the well-being and progress of the larger community—empowering them to critically think about the structural causes of the need for their service and take leadership roels to develop innovative solutions to them,” said Stephen Black, director of the Center for Ethics & Social Responsibility and SaveFirst Poverty in America instructor.
In its fifth year, SaveFirst is the largest volunteer tax-preparation program serving Earned Income Tax Credit families in Alabama. In 2011, 180 UA students (41 of whom enrolled in the Poverty in America course) assisted in preparing taxes at 15 sites across the state, helping more than 3,000 families claim more than $6 million in refunds in just six weeks. The students’ service helped these families save nearly $850,000 in commercial-tax-preparation fees.
More than 492,000 working families in Alabama annually claim the EITC, representing a $1 billion investment for the state. However, an estimated $133 million in EITC dollars are unclaimed by families who are eligible for the credit but do not know to claim it. Moreover, 75 percent of Alabama’s EITC recipients pay an average of $200 to commercial tax preparers just to access this benefit. They often take out predatory refund-anticipation loans as well, at annual percentage rates of up to 800 percent, further eroding EITC benefits. Alabama families lose $77 million to commercial tax preparers through fees and refund-anticipation loans. That extra $77 million could help low-income families secure health insurance, pay down debts or put food on the table.
UA students participating in SaveFirst in 2011 collaborated with more than 300 students from 11 other campuses statewide. In total, SaveFirst volunteers prepared returns for 3,600 working families—helping them claim $8 million in refunds and saving them more than $1.1 million in commercial-tax-preparation fees and refund anticipation loan costs.
SaveFirst is a collaborative effort among more than 50 community-based organizations throughout Alabama, including universities, mayors’ offices in each city where SaveFirst operates, school systems, churches and nonprofits.