2013 was a year of many changes to the U.S. tax code, and some of the most significant changes were targeted at raising taxes on high-income Americans. The fiscal cliff tax deal created a new 39.6 percent income tax...
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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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