Tax Credits Don’t Necessarily Boost College Attendance, Research Finds

By April 8, 2015 News

The federal government spent $23 billion last year on tax credits to families paying for college. Despite the generous payout, the funds likely didn’t do much to boost college attendance, according to a new paper published by the National Bureau of Economic Research.

Higher-education tax credits, which have been around since 1997 and then were expanded significantly in 2009, don’t affect whether or where students enroll, or what other financial aid they receive, according to economists George B. Bulman ofUniversity of California, Santa Cruz, and Caroline M. Hoxby of Stanford University.

One big reason the money doesn’t make much difference in whether someone decides to go to college, or what school they attend, is the timing of the credit. Tuition bills arrive an average of nine or 10 months before a family would receive any tax credit, so the upfront costs remain an obstacle to many families.

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