The Corporation for Enterprise Development (CFED) doesn’t think so, according to its May 2014 report
Upside Down: Higher Education Tax Spending. The report offers illustrations of federal tax spending programs for higher education, explanations of how they fall short of meeting the neediest populations’ needs, and possible remedies for these shortfalls.
The report shows that spending through the tax code for higher education is roughly equal to the primary sources of federal support for special education (IDEA), K-12 (Title 1-A), and Pre-K (Head Start) combined. From another perspective, the amount is larger than the discretionary budgets of nine cabinet-level departments.
CFED also shows how higher education tax spending focuses support on high-income households by examining four credits: the Lifetime Learning Credit, American Opportunity Tax Credit, Student Loan Deduction, and Deduction for Higher Education Expenses. None of these credits pass their “simple test of equity and efficiency”: the bottom 40% of households (those making less than $70,000 annually) do not receive as much aid as the top 40% (those making more than $100,000). In fact, three out of the four credits benefit the top 40% of households more than all other households combined.
The report concludes with suggestions for Congress to adjust spending so that the neediest families may benefit from these expenditures.
