Recently, college affordability has been on the minds of many. Over the past decade, the cost of college tuition has outstripped both inflation and income growth. On top of that, students are grappling with an ever-growing burden of debt.
Considering the financial benefits of getting a college degree, lawmakers have sought to help students afford the cost of higher education.
Traditionally, this was done through loan programs and direct subsidies such as Pell Grants. However, higher education policy has shifted in recent years away from traditional loan and direct subsidy programs toward the use of various tax credits.
The question now is whether the tax code is the proper tool to increase access to higher education and make college more affordable.
Generally speaking, the answer is no.
First, these tax credits violate the principles of sound tax policy by greatly increasing the complexity and distortions in the tax code.
Second, if we are serious about reforming the tax code, there are four sound reasons to eliminate education tax credits within a comprehensive reform package: