Study: Additional Information on Higher Ed Tax Credits Has No Effect Student Outcomes
By Allie Bidwell, Communications Staff
A growing body of research has shown that distributing more information students, or reminding them of certain deadlines with “nudges” through emails, letters, or text messages can have an impact on student behaviors and outcomes. But a new paper based in Texas found providing more information about higher education tax credits had no effect on student outcomes, such as re-enrollment, application, and initial enrollment.
The study – conducted by Peter Bergman of Teachers College, Columbia University, Jeffrey Denning of Brigham Young University, and Dayanand Manoli of the University of Texas at Austin – examined the effect of providing additional information about tax credits with a sample of more than 1 million current or prospective college students in Texas. Generally, research has shown that tax credits – such as the American Opportunity Tax Credit (AOTC) and the Earned Income Tax Credit (EITC) – do not affect student enrollment or influence student behavior. This study’s results suggest that the lack of impact is not due to a lack of information about tax credit benefits.
The lack of an effect on student outcomes could have several reasons, the authors wrote. For example, students and families would not receive the financial benefit of the tax credits until several months after the start of the school year.
“While tax credits may appear to work as an incentive that changes the price of college, the timing makes it easy for families to perceive tax credits as a change in income rather than a change in the price of college,” the study said.
Additionally, the authors said some have speculated that tax credits do not have a stronger impact due to a lack of salience.
“Many students and families may simply not be aware of the availability or generosity of tax credits for college,” the authors wrote. “The most obvious time for a student to learn about tax credits for college is when they (or their parents) file taxes after college attendance. However, this occurs after students have made enrollment decisions.”
“Both the timing of tax credits and the potential lack of salience suggest that providing information to potential students about the tax benefits and … the receipt of these benefits to college attendance could potentially increase college enrollment,” the authors continued.
The authors tested their hypothesis on three groups of students: those who had already enrolled in college, those who previously applied and did not re-enroll, and rising high school seniors who had applied to college. The authors also varied the amount of detail provided and the delivery method for the groups.
Overall, the authors found no significant effect for any of the three groups of students. Additionally, none of the messaging and delivery variations appeared to have an impact on student outcomes.
“Our results provide more evidence that information-only interventions are unlikely to affect student outcomes,” the authors wrote. “As it stands now, tax credits for college operate mostly as a subsidy to college goers and their families.”
Publication Date: 8/31/2016
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