off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Striking New Studies Show EITC Boosts College Enrollment
We’ve previously highlighted research showing that the Earned Income tax Credit (EITC) encourages work — particularly among single mothers — and that children whose families get more income from the credit tend to do better in school. Now, two new working papers strengthen the case that the EITC helps children from low- and moderate-income working families get to college and show that it does so by boosting their educational performance and making college more affordable for families with high-school seniors. Improving Academic Performance One paper, by Michigan State University’s Michelle Maxfield, examines data from before and after changes to federal and state EITCs and finds that children receiving larger EITCs tend to do better academically in both the short and long term. Specifically, receipt of larger EITCs is linked to:
- Higher test scores, particularly in math. Larger EITC amounts are linked to improved test scores in the year of receipt for both elementary and middle-school students.
- Higher high-school graduation rates. In the long term, receiving a larger EITC in childhood increases the likelihood that a student will graduate high school or complete his or her GED.
- Higher college attendance rates. The larger the EITC a child’s family receives, the more likely he or she is to enter college by age 19 or 20.
- The EITC can boost college enrollment. For a high-school senior in a family whose income almost or just qualifies for the maximum EITC, a $1,000 increase in tax refunds received in the spring increases college enrollment rates the next fall by roughly 10 percent.
- That’s likely because receiving the EITC in the spring before college helps cash-strapped families afford college. “[T]he tax refunds that we study may effectively alleviate credit constrain[t]s for families with high-school seniors, allowing youths from these families to attend college,” the authors write.
- Both federal and state EITCs increase college enrollment. “[T]he enrollment response is larger in states that offer tax refunds tied to federal refundable credits.”
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