Consortium Reforms Shift Tax-Based Student Aid to Families Who Most Struggle with College Costs

December 12, 2013

By Julie Strawn

This is the final entry of a three-part series highlighting charts from the recent publication, Higher Education Tax Reform: A Shared Agenda for Increasing College Affordability, Access, and Success, written by the Consortium for Higher Education Tax Reform for the Bill & Melinda Gates initiative, Reimagining Aid Design and Delivery. The Consortium is a partnership of four organizations concerned with college affordability, access, and completion for low- and modest-income individuals: the Center for Postsecondary and Economic Success at CLASP, Young Invincibles, the New America Foundation's Education Policy Program, and The Education Trust.

Our package of reforms would realign the $34 billion federal investment in tax-based student aid with national goals of increasing college affordability, access, and success.

More than 80 percent of families would continue to be eligible for higher education tax benefits under our proposals, which would eliminate overlapping tax benefits, make it easier for families to understand and claim tax-based student aid, and deliver aid when college bills are due. Further, we propose linking tax breaks for higher education institutions to their performance on college access and completion. Finally, we would reinvest any potential savings from our reforms into student aid. Every dollar should be used to improve college access, affordability, and success, including through funding for the Pell Grant program.

Critically, our proposals are also fiscally responsible. According to estimates from the Tax Policy Center, our reform package would raise $16 billion in revenue over ten years (2014-2023)funds that would further help students through reinvestment in financial aid. Under our proposals, tax-based student aid would go primarily to the low- and modest-income families and individuals who most struggle with college costs.

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