Tax credits favour wealthy students

Seven years after the US Government began allowing federal tax deductions to offset the cost of university tuition, the deductions have been found to benefit wealthy families, according to the first government review of the programme.

Meanwhile, the percentage of students who take out loans to pay for tuition - and the amounts they borrow - continues to creep up. Moreover, the amount they pay after grants and loans have been exhausted has soared from $2,700 (Pounds 1,430) to between $8,300 and $20,000 a year over the past five years, depending on what kind of university they attend.

The study by the Government's National Center for Education Statistics concludes that tax credits save about $600 a year for the lowest-income families, but families earning more than $92,000 a year can save as much as $1,100.

While critics of the scheme complain that tax credits logically benefit families paying the highest income taxes, supporters point out that they are a way to help squeezed middle-class families whose children may not be eligible for other university tuition grants.

In fact, when direct government grants are included, low-income families receive much more tuition assistance than wealthier ones, to the tune of $3,300 a year versus $800. About a quarter of the poorest students have their entire tuition covered by grants.

The tax credits were enacted in 1997 as a way of helping the parents of university students without substantially increasing federal grant programmes.

But government initiatives have not managed to keep pace with rocketing tuition fees, and half of all students now take out loans.

Already registered?

Sign in now if you are already registered or a current subscriber. Or subscribe for unrestricted access to our digital editions and iPad and iPhone app.

Featured Jobs

Senior Lecturer in Electrical Power Engineering UNIVERSITY OF GREENWICH (MAIN ADDRESS)
Reader / Senior Lecturer in Civil Engineering UNIVERSITY OF GREENWICH (MAIN ADDRESS)
Dean, Faculty of Engineering and Science CURTIN UNIVERSITY SARAWAK MALAYSIA

Register to continue  

You've enjoyed reading five THE articles this month. Register now to get five more, or subscribe for unrestricted access.

Most Commented

Universities to scale back liberal arts and social science courses

  • David Humphries illustration (24 September 2015)

A Russell Group tagline rap is further proof that we need to reform the academy’s approach, argues Philip Moriarty

  • World University Rankings

US continues to lose its grip as institutions in Europe up their game

  • World University Rankings 2015-2016 methodology

Change for the better: fuelled by more comprehensive data, the 2015-2016 rankings probe deeper than ever

Inspired by previous movement in 1960s, PhD students say that ‘science is not neutral’ and urge scientists to confront their assumptions