Jason Russell of the Washington Examiner focuses on a new study that questions the value of college tuition tax credits.
Federal tax credits for college tuition have no effect on college attendance and other educational indicators, according to a new study published by the National Bureau of Economic Research.
“There are no discernible causal effects of the tax credits on any of the following outcomes: attending postsecondary school at all, attending at least half-time, attending a four-year college, attending a two-year college, instructional resources, core educational resources, the ‘list’ tuition and fees of the student’s college, the grant and scholarships the student receives, and the tuition the student pays,” according to the study.
The tax credit cost the federal government $23 billion in 2014, a 177 percent increase from 2008. Since the credit has no effect on improving education, it is unlikely the government earns this money back through any kind of higher incomes or economic growth.
The study’s authors had hoped to calculate the economic and societal returns of the tax credits, but such calculations would have found no return since the tax credits have no effect on educational indicators. In theory, more college attendance might raise incomes and reduce crime, but no such conclusion can be drawn. “Mechanisms for social returns all rely on a policy actually affecting education attainment in some way,” the study said. “Thus, regardless of how education generates social returns, we will necessarily find that society will earn a zero return on the tax credits.”
Imagine that: a government policy that costs a lot and does little. It sounds as if a little cost-benefit analysis is in order.
