The Implicit Taxes from College Financial Aid

@inproceedings{Edlin1997TheIT,
  title={The Implicit Taxes from College Financial Aid},
  author={Aaron Edlin and Andrew W. Dick},
  year={1997}
}
Families who earn more or who heed the “experts'” advice and save for college typically receive less financial aid. The financial aid system therefore implicitly taxes both income and assets. We use NPSAS aid award data to estimate these implicit taxes, and find that at average-priced colleges the marginal income tax ranges from 2 to 16% and the marginal asset levy from 8 to 26%. A typical family loses aid worth about $11,000 at average-priced colleges and $15,000 at expensive colleges by… CONTINUE READING

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