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Tax Preferences for Higher Education and Adult College Enrollment

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  • LaLumia, Sara

Abstract

The federal government delivers substantial college aid through the tax code. The designs of the Lifetime Learning tax credit and the tuition deduction may make them particularly useful to older students. This paper investigates how these provisions affect college attendance of individuals in their 30s and 40s. Using panel data and fixed effects instrumental variable estimation, I find no effect on adult college attendance or degree completion. There is a positive effect on college attendance among a subsample, those whose 1998 educational attainment fell short of earlier expectations. Overall, these results suggest that tax-based aid subsidizes inframarginal college attendance among adults.

Suggested Citation

  • LaLumia, Sara, 2012. "Tax Preferences for Higher Education and Adult College Enrollment," National Tax Journal, National Tax Association, vol. 65(1), pages 59-89, March.
  • Handle: RePEc:ntj:journl:v:65:y:2012:i:1:p:59-89
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    References listed on IDEAS

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    2. 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.
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    5. Jepsen, Christopher & Montgomery, Mark, 2009. "Miles to go before I learn: The effect of travel distance on the mature person's choice of a community college," Journal of Urban Economics, Elsevier, vol. 65(1), pages 64-73, January.
    6. John Bound & Michael F. Lovenheim & Sarah Turner, 2010. "Why Have College Completion Rates Declined? An Analysis of Changing Student Preparation and Collegiate Resources," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 129-157, July.
    7. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, pages 37-89.
    8. Susan Dynarski, 2008. "Building the Stock of College-Educated Labor," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 576-610.
    9. Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, pages 733-740.
    10. Bridget Terry Long, 2003. "The Impact of Federal Tax Credits for Higher Education Expenses," NBER Working Papers 9553, National Bureau of Economic Research, Inc.
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    Cited by:

    1. 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.
    2. Schwerdt, Guido & Messer, Dolores & Woessmann, Ludger & Wolter, Stefan C., 2012. "The impact of an adult education voucher program: Evidence from a randomized field experiment," Journal of Public Economics, Elsevier, pages 569-583.
    3. Turner, Nick, 2010. "Why Don’t Taxpayers Maximize their Tax-Based Student Aid? Salience and Inertial in Program Selection," University of California at San Diego, Economics Working Paper Series qt0pb3f440, Department of Economics, UC San Diego.
    4. 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.
    5. Bednar, Steven & Gicheva, Dora, 2013. "Tax benefits for graduate education: Incentives for whom?," Economics of Education Review, Elsevier, vol. 36(C), pages 181-197.
    6. Bergman, Peter & Denning, Jeffrey T. & Manoli, Dayanand, 2017. "Broken Tax Breaks? Evidence from a Tax Credit Information Experiment with 1,000,000 Students," IZA Discussion Papers 10997, Institute for the Study of Labor (IZA).
    7. Susan Dynarski & Judith Scott-Clayton, 2016. "Tax Benefits for College Attendance," NBER Working Papers 22127, National Bureau of Economic Research, Inc.
    8. 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.
    9. Turner Nicholas, 2011. "Why Don't Taxpayers Maximize their Tax-Based Student Aid? Salience and Inertia in Program Selection," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-24.

    More about this item

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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