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Broken Tax Breaks? Evidence from a Tax Credit Information Experiment with 1,000,000 Students

Author

Listed:
  • Bergman, Peter

    () (Columbia University)

  • Denning, Jeffrey T.

    () (Brigham Young University)

  • Manoli, Dayanand

    () (University of Texas at Austin)

Abstract

There is increasing evidence that tax credits for college do not affect college enrollment. This may be because prospective students do not know about tax benefits for credits or because the design of tax credits is not conducive to affecting educational outcomes. We focus on changing the salience of tax benefits by providing information about tax benefits for college using a sample of over 1 million students or prospective students in Texas. We sent emails and letters to students that described tax benefits for college and tracked college outcomes. For all three of our samples – rising high school seniors, already enrolled students, and students who had previously applied to college but were not currently enrolled – information about tax benefits for college did not affect enrollment or reenrollment. We test whether effects vary according to information frames and found that no treatment arms changed student outcomes. We conclude that salience is not the primary reason that tax credits for college do not affect enrollment.

Suggested Citation

  • 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).
  • Handle: RePEc:iza:izadps:dp10997
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    References listed on IDEAS

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    1. Jeffrey T. Denning, 2017. "Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints," Upjohn Working Papers and Journal Articles 17-267, W.E. Upjohn Institute for Employment Research.
    2. LaLumia, Sara, 2012. "Tax Preferences for Higher Education and Adult College Enrollment," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(1), pages 59-89, March.
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    4. George B. Bulman & Caroline M. Hoxby, 2015. "The Returns to the Federal Tax Credits for Higher Education," NBER Chapters,in: Tax Policy and the Economy, Volume 29, pages 13-88 National Bureau of Economic Research, Inc.
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    6. Bridget Terry Long, 2003. "The Impact of Federal Tax Credits for Higher Education Expenses," NBER Working Papers 9553, National Bureau of Economic Research, Inc.
    7. Saurabh Bhargava & Dayanand Manoli, 2015. "Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment," American Economic Review, American Economic Association, vol. 105(11), pages 3489-3529, November.
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    9. Benjamin L. Castleman & Lindsay C. Page, 2016. "Freshman Year Financial Aid Nudges: An Experiment to Increase FAFSA Renewal and College Persistence," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 389-415.
    10. Castleman, Benjamin L. & Owen, Laura & Page, Lindsay C., 2015. "Stay late or start early? Experimental evidence on the benefits of college matriculation support from high schools versus colleges," Economics of Education Review, Elsevier, vol. 47(C), pages 168-179.
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    Cited by:

    1. repec:eee:ecoedu:v:64:y:2018:i:c:p:313-342 is not listed on IDEAS
    2. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    3. Joshua Hyman, 2018. "Nudges, College Enrollment, and College Persistence: Evidence From a Statewide Experiment in Michigan," Working papers 2018-10, University of Connecticut, Department of Economics.

    More about this item

    Keywords

    tax benefits for college;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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