Taxes are a common theme on news shows in the U.S.; you may have even seen the Tax Foundation’s very own Kyle Pomerleau speaking about the presidential candidates’ tax plans. However, Americans rarely see a sitcom or...
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Higher Education Tax Credits are a Windfall for Universities
The Tax Foundation has released a new report that looks at the effects that tax credits for higher education have had on the rising costs of college tuition. The report explains how the credits have expanded, how they disproportionately benefit higher income families, and how they have failed to stop the increase in student loan debt. Additionally, it examines how, instead of being a helping hand for students, tax credits have turned into a windfall for universities.
College tuition plus room and board has grown by approximately 70 percent in the past decade. The rate of increase for tuition costs far outpaces the inflation rate and doesn’t appear to be slowing down anytime soon.
Because of the Free Application for Federal Student Aid (FAFSA), the college has intimate knowledge of each student’s (or family’s) income and assets and therefore knows to what extent a student’s family can afford college and if they are eligible for tax credits, loans, or other financial aid. This information allows the college to simply adjust its financial aid package in order to capture the maximum value of the tax credit.
To read the full report, click here.
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The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.