Washington (CNN) -- President Barack Obama called Wednesday for Congress to extend the tax credit that helped soften the blow of college tuition for more than 12 million students last year.
The American Opportunity Tax Credit program, which will cost $58 billion over a decade, is due to expire at the end of this year.
In a statement to reporters in the White House Rose Garden, Obama said the tax breaks help make a college education more affordable for Americans.
"I am calling on Congress to make this tax credit permanent," Obama said, using the occasion to campaign for Democratic policies on education in the upcoming congressional elections on November 2.
After touting his administration's steps to expand student loans and reform public school education in the country, Obama said Republicans want to cut government spending that could include a 20 percent reduction in education funding.
"Nothing would be more short-sighted," he said, noting that an "education arms race" was taking place around the world as China and other countries prepare their students to compete for future jobs in the global work force.
"Cutting back would amount to unilateral disarmament," Obama said. "We can't afford to do that."
Top government advisers told reporters Tuesday that extending the AOTC program would allow families to plan for college for their children.
"[Obama] believes that it is important for this to be extended and for families to have the certainty and confidence that this [credit] will be there when they are making the choices about sending their children to college," said Gene Sperling, counselor to the Treasury Secretary.
The tax break, introduced under the government's 2009 Recovery Act and applicable to 2009 or 2010 college tuition, expands the existing Hope Credit to include more lower- and higher-income Americans.
Unlike the Hope Credit, the AOTC is also partially refundable and covers more of the expenses associated with sending a child to college, such as textbooks and computers. It is available for the first four years of post-secondary education, up from two years under the Hope Credit.
More money is also given to students and parents under the AOTC. Students from families with incomes of $80,000 or less qualify for a credit of up to $2,500 a year, an increase of $700 from the previous Hope Credit.
Last year, students and families received an average credit of more than $1,700, which was 75 percent more than the average amount dished out under the Hope Credit, according to a Treasury Department analysis.
With government spending and the growing federal debt a top issue in next month's elections, investing in education is always the proper policy, Sperling said.
"Whether we're in good times or in tough times, we don't ever want to discourage families from investing in their children's future," he said.
CNNMoney's Blake Ellis contributed to this story.