Tax Benefits for College Attendance

38 Pages Posted: 4 Apr 2016

See all articles by Susan M. Dynarski

Susan M. Dynarski

National Bureau of Economic Research (NBER); University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan at Ann Arbor - School of Education

Judith Scott-Clayton

Columbia University

Date Written: March 2016

Abstract

National efforts to promote college enrollment are increasingly delivered through tax-based assistance, including tax credits and deductions for tuition and fees, tax-advantaged college savings plans, and student loan interest deductions. This paper outlines the main tax-based student aid programs and describes their history and growth over time. We then provide an economic perspective on tax-based student aid, and an assessment of their impact on student behavior. We conclude with a discussion of what the tax system does particularly well and what it does particularly poorly in comparison to traditional Department of Education-based student aid programs, and highlight opportunities for productive reform. At a minimum, a simpler system of education tax benefits would decrease the administrative and time costs of transferring funds to households with postsecondary expenses. At best, simplification would clarify incentives and increase investments in human capital.

Suggested Citation

Dynarski, Susan M. and Scott-Clayton, Judith, Tax Benefits for College Attendance (March 2016). NBER Working Paper No. w22127. Available at SSRN: https://ssrn.com/abstract=2758476

Susan M. Dynarski (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States

University of Michigan at Ann Arbor - School of Education ( email )

610 East University Avenue
Ann Arbor, MI 48109-1259
United States

Judith Scott-Clayton

Columbia University ( email )

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