A public policy expert says Congress should redesign current federal college savings tax incentives.[@@]
The current incentives do virtually nothing to help low-income students pay for college, Susan Dynarski, an assistant professor of public policy at Harvard University, testified Thursday at a Senate Finance Committee hearing on efforts to strengthen the U.S. workforce by improving higher education financing.
Dynarski discussed the Section 529 college savings program, the Coverdell Education Savings Account program, the tuition tax deduction and the 2 college tax credit options
The programs can be helpful for high-income and middle-income families send their children to private schools, Dynarski said, according to a written version of her remarks.
“But, as structured, the tax incentives do not encourage more people to go to college,” Dynarski said. It is the student “who is trying to decide whether college is the right path, her family nervous about the costs, that we need to help if we want to increase the skills of our workforce,” Dynarski said. “Making the local community college or public university cheaper may just convince her to go to college. Making Harvard cheaper will not.” Dynarski added that the government and colleges have reduced the effectiveness of existing college savings incentives by failing to coordinate the savings programs with financial need calculations.