Federal tax rebate program outpaces Pell Grant spending by $4.1B
- A federal tax credit program that awards families $2,500 for every child enrolled in college awarded Americans more than $34 billion in 2014, outpacing awards through the federal Pell Grant program by more than $4 billion.
- A new study from the Pew Charitable Trusts shows that a majority of rebates awarded under the American Opportunity Tax Credit allow households making in excess of $100,000 annually to collectively receive more federal support than families meeting the Pell Grant threshold, which requires an annual income of $50,000 or less.
- Alternative college funding programs, like 529 savings accounts, are only utilized by about 10% of low-income families.
There is little that college leaders can do to change federal systems of funding for families, but they can make institutional policy to help students make wise decisions about college spending and affordability.
By helping students to better understand the application and filing processes for financial aid, along with the additional costs of college attendance, families can make the best decisions on where to enroll, while institutions can preserve their efforts to retain and to graduate the students who do enroll.