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Tax-based federal student aid - the Hope Tax Credit, Lifetime Learning Tax Credit, and Tuition Deduction - marks a new paradigm for federal aid by offering tax incentives for post-secondary enrollment for the middle class. The author exploits policy-induced variation in tax-based aid eligibility to estimate its causal effect on college enrollment. The author finds that tax-based aid increases full-time enrollment in the first two years of college for 18 to 19 years old by 7 per cent. The price sensitivity of enrollment suggests that college enrollment increases 0.3 percentage points per $100 of tax-based aid. The programs do not appear to substantively affect part-time enrollment in the first two years of college.

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We characterize intergenerational income mobility at each college in the United States using data for over 30 million college students from 1999-2013. We document four results. First, access to colleges varies greatly by parent income. For example, children whose parents are in the top 1 per cent of the income distribution are 77 times more likely to attend an Ivy League college than those whose parents are in the bottom income quintile. Second, children from low- and high-income families have similar earnings outcomes conditional on the college they attend, indicating that low-income students are not mismatched at selective colleges. Third, rates of upward mobility - the fraction of students who come from families in the bottom income quintile and reach the top quintile - differ substantially across colleges because low-income access varies significantly across colleges with similar earnings outcomes. Rates of bottom-to-top quintile mobility are highest at certain mid-tier public universities, such as the City University of New York and California State colleges. Rates of upper-tail (bottom quintile to top 1 per cent) mobility are highest at elite colleges, such as Ivy League universities. Fourth, the fraction of students from low-income families did not change substantially between 2000-2011 at elite private colleges, but fell sharply at colleges with the highest rates of bottom-to-top-quintile mobility. Although our descriptive analysis does not identify colleges' causal effects on students' outcomes, the publicly available statistics constructed here highlight colleges that deserve further study as potential engines of upward mobility.

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This working paper was issued in May 2016 and revised in January 2018. We draw on population-level administrative data from the US Department of Education and the Internal Revenue Service to quantify the impact of for-profit college attendance on the employment and earnings of over one million students. Using a matched comparison group difference-in-differences design, we find that certificate-seeking students in for-profit institutions are 1.5 percentage points less likely to be employed and, conditional on employment, have 11 per cent lower earnings after attendance than students in public institutions. These results hold for both men and women and for seven of the top ten fields of study. We find that earnings and employment outcomes are particularly poor for students attending for-profit colleges that offer the majority of their courses online and for multi-campus chains. We find that for-profit students experience small, statistically insignificant gains in annual earnings after attendance compared to a matched control group of young individuals who do not attend college. A back-of-the-envelope comparison of these earnings gains to average debt burdens suggests that for-profit certificate programs do not pay off for the average student.

Published abstract with additional information. Show less