IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v64y2011i3p839-61.html
   My bibliography  Save this article

The Effect of Tax-Based Federal Student Aid on College Enrollment

Author

Listed:
  • Turner, Nicholas

Abstract

Tax-based federal student aid — the Hope Tax Credit, Lifetime Learning Tax Credit, and Tuition Deduction — marks a new paradigm for federal aid by offering tax incentives for postsecondary enrollment for the middle class. I exploit policy-induced variation in tax-based aid eligibility to estimate its causal effect on college enrollment. I find that tax-based aid increases full-time enrollment in the first two years of college for 18 to 19 years old by 7 percent. The price sensitivity of enrollment suggests that college enrollment increases 0.3 percentage points per $100 of taxbased aid. The programs do not appear to substantively affect part-time enrollment in the first two years of college.

Suggested Citation

  • Turner, Nicholas, 2011. "The Effect of Tax-Based Federal Student Aid on College Enrollment," National Tax Journal, National Tax Association, vol. 64(3), pages 839-861, September.
  • Handle: RePEc:ntj:journl:v:64:y:2011:i:3:p:839-61
    as

    Download full text from publisher

    File URL: https://www.ntanet.org/NTJ/64/3/ntj-v64n03p839-61-effect-tax-based-federal.pdf
    Download Restriction: no

    File URL: https://www.ntanet.org/NTJ/64/3/ntj-v64n03p839-61-effect-tax-based-federal.html
    Download Restriction: no

    References listed on IDEAS

    as
    1. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association, vol. 53(3), pages 629-662, September.
    2. Helena Skyt Nielsen & Torben Sørensen & Christopher Taber, 2010. "Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform," NBER Chapters,in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 185-215 National Bureau of Economic Research, Inc.
    3. Neil S. Seftor & NSarah E. Turner, 2002. "Back to School: Federal Student Aid Policy and Adult College Enrollment," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 336-352.
    4. LaLumia, Sara, 2012. "Tax Preferences for Higher Education and Adult College Enrollment," National Tax Journal, National Tax Association, pages 59-89.
    5. Eric P. Bettinger & Bridget Terry Long & Philip Oreopoulos & Lisa Sanbonmatsu, 2009. "The Role of Simplification and Information in College Decisions: Results from the H&R Block FAFSA Experiment," NBER Working Papers 15361, National Bureau of Economic Research, Inc.
    6. Thomas J. Kane, 2003. "A Quasi-Experimental Estimate of the Impact of Financial Aid on College-Going," NBER Working Papers 9703, National Bureau of Economic Research, Inc.
    7. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, pages 94-105.
    8. Susan M. Dynarski & Judith E. Scott-Clayton, 2008. "Complexity and Targeting in Federal Student Aid: A Quantitative Analysis," NBER Chapters,in: Tax Policy and the Economy, Volume 22, pages 109-150 National Bureau of Economic Research, Inc.
    9. Damon Jones, 2012. "Inertia and Overwithholding: Explaining the Prevalence of Income Tax Refunds," American Economic Journal: Economic Policy, American Economic Association, pages 158-185.
    10. repec:mpr:mprres:3250 is not listed on IDEAS
    11. Bridget Terry Long, 2003. "The Impact of Federal Tax Credits for Higher Education Expenses," NBER Working Papers 9553, National Bureau of Economic Research, Inc.
    12. Mengel, Friederike & Peeters, Ronald, 2011. "Strategic behavior in repeated voluntary contribution experiments," Journal of Public Economics, Elsevier, vol. 95(1), pages 143-148.
    13. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    14. Rothstein, Jesse & Rouse, Cecilia Elena, 2011. "Constrained after college: Student loans and early-career occupational choices," Journal of Public Economics, Elsevier, pages 149-163.
    15. Kane, Thomas J, 1994. "College Entry by Blacks since 1970: The Role of College Costs, Family Background, and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 878-911, October.
    16. Susan Dynarski, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," NBER Working Papers 7756, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lindsay C. Page & Judith Scott-Clayton, 2015. "Improving College Access in the United States: Barriers and Policy Responses," NBER Working Papers 21781, National Bureau of Economic Research, Inc.
    2. Amuedo-Dorantes, Catalina & Sparber, Chad, 2014. "In-state tuition for undocumented immigrants and its impact on college enrollment, tuition costs, student financial aid, and indebtedness," Regional Science and Urban Economics, Elsevier, pages 11-24.
    3. Dayanand S. Manoli & Nicholas Turner, 2014. "Cash-on-Hand & College Enrollment: Evidence from Population Tax Data and Policy Nonlinearities," NBER Working Papers 19836, National Bureau of Economic Research, Inc.
    4. George B. Bulman & Caroline M. Hoxby, 2015. "The Returns to the Federal Tax Credits for Higher Education," Tax Policy and the Economy, University of Chicago Press, pages 13-88.
    5. Page, Lindsay C. & Scott-Clayton, Judith, 2016. "Improving college access in the United States: Barriers and policy responses," Economics of Education Review, Elsevier, vol. 51(C), pages 4-22.
    6. Hoxby, Caroline M. & Bulman, George B., 2016. "The effects of the tax deduction for postsecondary tuition: Implications for structuring tax-based aid," Economics of Education Review, Elsevier, vol. 51(C), pages 23-60.
    7. Elsayed, Mahmoud A.A., 2016. "The Impact of Education Tax Benefits on College Completion," Economics of Education Review, Elsevier, vol. 53(C), pages 16-30.
    8. Turner, Nicholas, 2012. "Who benefits from student aid? The economic incidence of tax-based federal student aid," Economics of Education Review, Elsevier, vol. 31(4), pages 463-481.
    9. Bednar, Steven & Gicheva, Dora, 2013. "Tax benefits for graduate education: Incentives for whom?," Economics of Education Review, Elsevier, vol. 36(C), pages 181-197.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:64:y:2011:i:3:p:839-61. 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: (Ann Crampton). General contact details of provider: http://edirc.repec.org/data/ntaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.