Simplifying tax incentives and aid for college

Progress and prospects

Susan Dynarski, Judith Scott-Clayton, Mark Wiederspan

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

The application for federal student aid is longer than the tax returns filled out by the majority of US households. Research suggests that complexity in the aid process undermines its effectiveness in inducing more students into college. A previous Tax Policy and the Economy paper showed that most of the data items in the aid application did not affect the distribution of aid and that the much shorter set of variables available in IRS data could be used to closely replicate the existing distribution of aid. This added momentum to a period of discussion and activity around simplification in Congress and the US Department of Education. In this article, we provide a 5-year retrospective of what has changed in the aid application process, what has not, and the possibilities for future reform. While there has been some streamlining in the process of applying for aid, it has fallen far short of its goals. Two dozen questions were removed from the aid application anda dozen added, reducing the number of questions from 127 to 116. Funding for college has also been complicated by the growth of a parallel system for aid: the tax system. A massive expansion infederal tax incentives for college, inparticular the American Opportunity Tax Credit, has led to millions of households completing paperwork for both the IRS and the US Department of Education in order to qualify for college funding.

Original languageEnglish (US)
Pages (from-to)161-201
Number of pages41
JournalTax Policy and the Economy
Volume27
Issue number1
DOIs
StatePublished - 2013
Externally publishedYes

Fingerprint

Tax incentives
Household
Funding
Education
Tax
Tax system
Tax credits
College students
Tax policy
Momentum

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

Simplifying tax incentives and aid for college : Progress and prospects. / Dynarski, Susan; Scott-Clayton, Judith; Wiederspan, Mark.

In: Tax Policy and the Economy, Vol. 27, No. 1, 2013, p. 161-201.

Research output: Contribution to journalArticle

Dynarski, S, Scott-Clayton, J & Wiederspan, M 2013, 'Simplifying tax incentives and aid for college: Progress and prospects', Tax Policy and the Economy, vol. 27, no. 1, pp. 161-201. https://doi.org/10.1086/671247
Dynarski, Susan ; Scott-Clayton, Judith ; Wiederspan, Mark. / Simplifying tax incentives and aid for college : Progress and prospects. In: Tax Policy and the Economy. 2013 ; Vol. 27, No. 1. pp. 161-201.
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