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1 Scott A. Hodge & Kyle Pomerleau, Is the Tax Code the Proper Tool for Making Higher Education More Affordable 1 (2014)

handle is hein.taxfoundation/taxfaaub0001 and id is 1 raw text is: ax@ Is the Tax Code the Proper Tool for FOUNDATION Making Higher Education More TL Affordable? By Scott A. Hodge Kyle Pomerleau President Economist Key Findings * Education tax credits have grown from a $4.5 billion program claimed by 4.7 million taxpayers to a $17.4 billion program claimed by over 7 million taxpayers in 2011. * Despite the use of tax credits, in the last decade student loan debt rose from just over $400 billion to nearly $1 trillion in 2012, while the cost of colege rose 70 percent. * Colleges have intimate knowledge of each student's or family's needs for tax credits, loans, or other financial aid, which allows the colleges to capture the maximum value of tax credits. * Education tax credits are not well targeted toward low and middle- income familes; roughly 30 percent of the current benefits of education tax credits accrue to taxpayers earning over $100,000 and an additional 18 percent accrues to those earning over $75,000. * The overuse of tax credits by the federal government has turned the IRS into a spending agency, with refundable tax credits project to double to nearly $200 billion in the next five years, largely due to the Affordable Care Act. Trading the elimination of education tax credits for lower marginal tax rates would grow the economy by $19 billion per year and create 121,000 jobs. * Congress should consider other solutions to lessen the burden of tuition costs, such as increasing saving opportunities in the tax code, expanding pre-paid tuition plans to keep cost down, or reinvigorating well-targeted programs like Pell Grants and direct loans.

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