Publications by Topic
Topic: Education
Subsidizing Higher Education Through Tax and Spending Programs (Policy Briefs/Tax Policy: Issues and Options)
Author(s):
Elaine Maag , David Mundel , Lois Rice , Kim Rueben
In 1997 Congress enacted a number of tax benefits directed toward helping middle- and upper-middle income groups meet rising college costs. This shift in goals and strategies raises concerns about the fairness and effectiveness of the evolving federal approach to higher education. This policy brief analyzes who benefits from the major direct spending program, Pell grants, and the three tax subsidies that most closely resemble grants, the Hope and Lifetime Learning credits and the deduction for tuition and fees. In addition, the brief assesses the potential impacts of these direct spending and tax programs on the affordability of college and the college-going rates of potential students.
Published: 05/16/07
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Education Spending and Changing Revenue Sources (Article/Tax Facts)
Author(s):
Sonya Hoo , Sheila Murray , Kim Rueben
School districts in 37 states are "independent" and able to generate their own revenues, usually by setting property tax rates. Some school districts in other states are dependent on cities, towns or counties for funding authority. In addition, school districts have increasingly been dependent on state aid for funding.
Published: 04/10/06
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The New Safety Net: How the Tax Code Helped Low-Income Working Families During the Early 2000s (Research Report)
Author(s):
Alan Berube
As fiscal pressures continue to constrain public expenditures on lower-income families, the EITC increasingly constitutes a large part of a new safety net for the low-wage workforce. This report analyzes IRS data on low-income working families who received the EITC between tax years 2000 and 2003, finding that coincident with the economic downturn the number of EITC claims rose 14 percent during that time. Over the same period, the proportion of EITC recipients filing returns through paid preparers rose from 65 to 71 percent despite expansions in the provision of free tax assistance. The report also reveals that these low-income taxpayers benefited from federal education and child care tax credits at low rates, due largely to their non-refundable nature.
Published: 02/15/06
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The Distributional Consequences of Federal Assistance for Higher Education: The Intersection of Tax and Spending Programs (Discussion Papers/Tax Policy Center)
Author(s):
Leonard E. Burman , Elaine Maag , Peter Orszag , Jeff Rohaly , John O'Hare
For nearly a decade, federal higher education subsidies have increasingly been delivered through the tax code rather than through direct spending programs such as grants, loan subsidies, and work study. This paper reviews the results of using new modules in the TRIM and Tax Policy Center microsimulation models to estimate the distributional impacts and expenditure and revenue effects of major federal higher education tax and spending policies. In addition, the paper reports estimates of the effects of some prototypical policy changes in the Pell Grant program as well as in the Hope and Lifetime Learning tax credits.
Published: 08/19/05
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High-Income Families Benefit Most from New Education Savings Incentives (Policy Briefs/Tax Policy: Issues and Options)
Author(s):
Susan Dynarski
If funds from education savings plans are not used for schooling, the penalties more than offset the tax benefits for lower-income families. But higher-income families gain even if their children do not go to college. A new breed of tax-advantaged savings vehicle has emerged for the college bound. Earnings on both the federal Coverdell Education Savings Account (ESA) and the state-level 529 savings plan are tax-free if the funds are used for postsecondary education. One reason that the advantages of these education plans rise sharply with income is that that those with the highest marginal tax rates benefit the most from sheltering income. This brief explains how these new college plans work.
Published: 02/28/05
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Tax Credits and Grants for Undergraduates (Article/Tax Facts)
Author(s):
Katie Fitzpatrick , Elaine Maag
The nation's 16.5 million postsecondary students can receive financial aid that does not need to be repaid from federal and state governments, institutions, and other private sources. During the 1970s and 1980s as college costs increased dramatically, these grants tended to focus on increasing access to college for low-income students.
Published: 05/31/04
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Federal Financial Aid for Higher Education: Programs and Prospects (Research Report)
Author(s):
Elaine Maag , Katie Fitzpatrick
In recent years, Congress has augmented traditional financial aid programs for higher education with tax-based subsidies. The tax subsidies can be very helpful to middle-income students who may not have been eligible for aid through traditional channels, but may be worth little or nothing to students from low-income families. This paper reviews financial assistance for higher education available through both traditional spending programs (grants, loans, and work-study) and tax assistance (credits, deductions, and tax-preferred savings plans). It summarizes recent research findings on the effectiveness of this aid and interactions among the various programs. It also discusses the role of future tax and fiscal policy choices in determining the level and nature of resources available for higher education needs.
Published: 01/01/04
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Higher Education Spending: The Role of Medicaid and the Business Cycle (Discussion Papers/Tax Policy Center)
Author(s):
Thomas J. Kane , Peter Orszag
[© Brookings Institution] In recent years, many public colleges and universities around the country have announced double-digit increases in tuition. The recession and the resulting squeeze on state revenues are the immediate causes. However, the short-term crisis should not be allowed to obscure a longer-term shift in state financing of higher education, which began more than a decade ago. As states have struggled to respond to other demands on their budgets-primarily due to rising state Medicaid obligations-parents and students have been asked to pay an increasingly large share of the costs in public higher education. Public colleges and universities should not expect much respite when the current crisis recedes. In many states, the cuts imposed on higher education during the last recession in 1990-91 were not made up in the subsequent recovery. Because Medicaid expenditures are expected to grow rapidly over the coming decades, state support for higher education is likely to come under increasing pressure, even as state revenues recover. Since roughly three-quarters of all college students in the United States attend public institutions, the implications for the nation's higher education system are profound.
Published: 09/12/03
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Subsidizing Higher Education Through the Federal Income Tax Code (Article/Tax Facts)
Author(s):
Katie Fitzpatrick , Elaine Maag
The Taxpayer Relief Act of 1997 expanded assistance for postsecondary education for low- and middle-income families with the creation of two new credits: the Hope Scholarship Credit (Hope Credit) and the Lifetime Learning Credit (LLC). Both are intended to subsidize the cost of attending school by allowing a portion of a student's expenses to be offset by a tax credit.
Published: 07/07/03
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State Fiscal Constraints and Higher Education Spending: The Role of Medicaid and the Business Cycle (Discussion Papers)
Author(s):
Thomas J. Kane , Peter Orszag , David L. Gunter
State governments have historically taken the lead in financing higher education. Over the past twenty years, however, state support for higher education has gradually waned, with the share of higher education expenditures subsidized by state appropriations declining. In this paper, we use state-level data on expenditures since 1977 to study the forces underlying the shift in state financing. More specifically, we examine interactions between state appropriations for higher education, other state budget items (especially Medicaid), and the business cycle.
Published: 05/22/03
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