The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics
The federal system for distributing student financial aid rivals the tax code in its complexity. Both have been a source of frustration and a focus of reform efforts for decades, yet the complexity of the student aid system has received comparatively little attention from economists. We describe the complexity of the aid system, and apply lessons from optimal tax theory and behavioral economics to show that complexity is a serious obstacle to both efficiency and equity in the distribution of student aid. We show that complexity disproportionately burdens those with the least ability to pay and undermines redistributive goals. We use detailed data from federal student aid applications to show that a radically simplified aid process can reproduce the current distribution of aid using a fraction of the information now collected.
Volume (Year): 59 (2006)
Issue (Month): 2 (June)
|Contact details of provider:|| Postal: |
Fax: (202) 737-7308
Web page: http://www.ntanet.org/Email:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:59:y:2006:i:2:p:319-56. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charmaine Wright)
If references are entirely missing, you can add them using this form.