IDEAS home Printed from https://ideas.repec.org/p/cdl/ucsdec/qt7g0888mj.html
   My bibliography  Save this paper

Who Benefits From Student Aid? The Economic Incidence of Tax-Based Federal Student Aid

Author

Listed:
  • Turner, Nick

Abstract

Federal student aid is designed to lower the costs of postsecondary attendance, working to ensure that higher education is widely accessible. The effectiveness of these programs depends crucially on the existence of offsetting price changes. Contrary to the intention of policymakers, I find that schools fully counteract the cost reduction of tax-based aid by lowering institutional aid dollar-for-dollar. This finding implies that colleges and universities capture the financial benefits of tax-based aid at the expense of eligible students and families.

Suggested Citation

  • Turner, Nick, 2010. "Who Benefits From Student Aid? The Economic Incidence of Tax-Based Federal Student Aid," University of California at San Diego, Economics Working Paper Series qt7g0888mj, Department of Economics, UC San Diego.
  • Handle: RePEc:cdl:ucsdec:qt7g0888mj
    as

    Download full text from publisher

    File URL: http://www.escholarship.org/uc/item/7g0888mj.pdf;origin=repeccitec
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gordon, Nora, 2004. "Do federal grants boost school spending? Evidence from Title I," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1771-1792, August.
    2. Gordon B. Dahl & Lance Lochner, 2012. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," American Economic Review, American Economic Association, vol. 102(5), pages 1927-1956, August.
    3. Gabor Kezdi, 2005. "Robus Standard Error Estimation in Fixed-Effects Panel Models," Econometrics 0508018, EconWPA.
    4. Fullerton, Don & Metcalf, Gilbert E., 2002. "Tax incidence," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872 Elsevier.
    5. Estelle James, 1978. "Product Mix and Cost Disaggregation: A Reinterpretation of the Economics of Higher Education," Journal of Human Resources, University of Wisconsin Press, vol. 13(2), pages 157-186.
    6. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
    7. Baicker, Katherine & Gordon, Nora, 2006. "The effect of state education finance reform on total local resources," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1519-1535, September.
    8. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-586, June.
    9. Susan Dynarski, 2004. "The New Merit Aid," NBER Chapters,in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 63-100 National Bureau of Economic Research, Inc.
    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.
    11. Bridget T. Long, 2004. "The Impact of Federal Tax Credits for Higher Education Expenses," NBER Chapters,in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 101-168 National Bureau of Economic Research, Inc.
    12. Michael Rizzo & Ronald G. Ehrenberg, 2004. "Resident and Nonresident Tuition and Enrollment at Flagship State Universities," NBER Chapters,in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 303-354 National Bureau of Economic Research, Inc.
    13. Jesse Rothstein, 2009. "Is the EITC Equivalent to an NIT? Conditional Cash Transfers and Tax Incidence," NBER Working Papers 14966, National Bureau of Economic Research, Inc.
    14. Caroline M. Hoxby & Ilyana Kuziemko, 2004. "Robin Hood and His Not-So-Merry Plan: Capitalization and the Self-Destruction of Texas' School Finance Equalization Plan," NBER Working Papers 10722, National Bureau of Economic Research, Inc.
    15. Caroline M. Hoxby, 1998. "Tax Incentives for Higher Education," NBER Chapters,in: Tax Policy and the Economy, Volume 12, pages 49-82 National Bureau of Economic Research, Inc.
    16. Larry D. Singell & Joe A. Stone, 2003. "For Whom the Pell Tolls: Market Power, Tuition Discrimination, and the Bennett Hypothesis," University of Oregon Economics Department Working Papers 2003-12, University of Oregon Economics Department.
    17. Charles T. Clotfelter, 1999. "The Familiar but Curious Economics of Higher Education: Introduction to a Symposium," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 3-12, Winter.
    18. James R. Hines & Richard H. Thaler, 1995. "The Flypaper Effect," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 217-226, Fall.
    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. Turner, Nicholas, 2010. "The Effect of Tax-Based Federal Student Aid on College Enrollment," University of California at San Diego, Economics Working Paper Series qt6758069g, Department of Economics, UC San Diego.

    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:cdl:ucsdec:qt7g0888mj. 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: (Lisa Schiff). General contact details of provider: http://edirc.repec.org/data/deucsus.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.