It’s not just colleges and universities that are shifting their financial aid from lower-income to higher-income students.
Tuition tax credits and other tax breaks to offset the cost of higher education—nearly invisible federal government subsidies for families that send their kids to college—also disproportionally benefit more affluent Americans. So do tax-deductible savings plans and the federal work-study program, which gives taxpayer dollars to students who take campus jobs to help pay for their expenses.
The tax credits alone cost the government a combined $34 billion a year, or $1 billion more than is spent on Pell Grants, the direct government grants for low-income students. And even though only one-fifth of American households earn more than $100,000 per year, that group got more than half of the deductions for tuition, fees and exemptions for dependent students, according to the Tax Policy Center. This despite research showing that 13 out of 14 students whose families received tax breaks on tuition would have gone to college anyway. <Read more.>