Policy Groups Urge Using Tax Credits To Improve College Performance

Career College Central summary:

  • Skeptical that Congress will end tuition tax credits they say disproportionately benefit higher- rather than lower-income students, advocates for reform want the tax breaks to at least be used to encourage colleges to raise their graduation rates and reduce borrowing.
  • Among their other proposals, a consortium of groups pushing for changes in the federal financial-aid system said eligibility for the tax credits should be based, in part, on which college or university a student chooses to attend. Institutions with poor graduation rates or low numbers of low-income students, or whose students finish with high levels of debt, would be excluded.
  • Another form of tax advantages for universities—those that subsidize bonds for campus construction projects—also would be changed under the reformers’ proposals, and colleges that fall short on success rates and enrollment of low-income students or have high student-loan default rates would not be allowed to get them.
  • “It’s a mighty strong lever,” Michael Dannenberg, director of higher education and education finance policy at the Education Trust, said of even the threat of using federal tax credits and exemptions to change universities’ behavior.

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