Wednesday, April 16, 2014
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Tax-based aid needs reform, report suggests

Redirecting tax-based aid to be more available for low-income students could both increase college enrollment and completion rates for such students, and serve to strengthen the economy, according to a new report.

“The reason it [tax-based aid] is more accessible to higher-income families is that the aid is delivered through the income tax system,” said Patrick Reimherr, an author of the report. “The amount of tax liability you have determines the extent of aid you can receive.”

Difficulties in financing college and obtaining aid contribute to lower graduation rates for students with low-income backgrounds, said Boston University economics professor Randall Ellis.

“Financial burdens are one of the major reasons that people don’t finish college, especially in low-income houses,” Ellis said.

Although tax-based aid constitutes almost half of all non-loan federal aid, it provides little benefit to low-income students, according to a report released Wednesday by the Center for Postsecondary and Economic Success. The report suggested simplifying tax-based student aid in order to increase educational opportunity.

With the cost of college rising at four times the rate of income and two-and-a-half times the rate of Pell Grants, it is crucial that federal aid be used efficiently, the report stated. By funneling more tax-based student aid to low-income families, more people will graduate and the federal government can save billions of dollars.

High-income families have more access to aid because the parents of high-income families are, on average, better educated than those of low-income families, Ellis said.

“They know how to look for scholarships for their children,” Ellis said. “They can also afford and apply to more expensive schools, including BU, and therefore they get more financial aid.”

The report aims to simplify tax-based aid so low-income families can have more access, Reimherr said. Its writers proposed three solutions to address rising tuition.

“Our goal was to establish a framework for reform,” Reimherr said. “In general they all create a very similar framework for reform — they all take steps toward accomplishing the same goals.”

The first proposal calls for simplification by consolidating several tax credits into one, while remaining revenue neutral.

“If you think simplification is the most important thing, then it’s probably the best solution,” Reimherr said. “If you think we should target the maximum amount of aid towards low income students, then it’s also the best solution.”

The other two proposals generate a modest amount of revenue that could be reinvested in the Pell Grant program, Reimherr said.

A number of BU students said federal aid should be redistributed

Courtney McGuire, a College of Arts and Sciences sophomore, said low-income families are a target, but the government should also help more middle class families so more people can go to school.

“If you can afford to pay for school, you shouldn’t be getting aid,” McGuire said. “[Aid] should go to the people who actually need it.”

Tyler Sorgman, a College of Fine Arts sophomore, said a college education is necessary for attaining a stable job.

“[College is] still so inaccessible to a lot of people, which I just don’t think is fair,” Sorgman said.

Amanda Rumsey, a CAS junior, said student aid, if provided by the government, should be directed to lower-income families.

“It depends on everyone’s situation, but if you’re lower income, you should have the opportunity to pay it back just like wealthy people,” Rumsey said. “It shouldn’t be segregated on who would be more likely to pay it back.”

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