Inside Higher Ed reports:

Federal student aid — with its various needs tests — generally goes to low income students. But federal tax breaks for college costs, largely adopted during the Clinton administration, are having a significant impact on the amount of federal assistance going to wealthier students.

The average tax benefit received by families with incomes of $92,000 or more was greater in fact than the average benefit for those with incomes less than $32,000. This analysis comes from “Student Financing of Undergraduate Education: 2003-4,” released Wednesday by the National Center for Education Statistics. While the report is an annual look at tuition and financial aid, the study released Wednesday had the most thorough analysis to date of the impact of federal tax breaks as a student aid tool.

When the tax breaks were created, and in the years since, some critics have predicted that they would end up helping students who least need the help, and the new data are likely to reinforce that impression. Defenders of the tax credits have countered that many middle class families need support and that Congress and the administration are unwilling to make large increases in Pell Grants or other programs that are more focused on low-income students.

Is it really surprising that rich people can get the government to do what they want? Unfortunately (?), the report itself does not mention Williams specifically and much of the material is irrelevant to our focus here on elite education. But it does suggest a great senior thesis! How has the real cost of attending Williams changed over the last 30 years? The sticker price has, obviously, gone up, but the amount of tax breaks and financial aid has increased as well. Might Williams be cheaper now than it was in 1976?

The applicant (and admittee) pool has grown wealthier as well, at least among US citizens. So, even if the absolute dollar expense (adjusted for increased financial aid and inflation) has increased, the cost as a percentage of family income or wealth for the average student may not have gone up much, if at all. Curious about this? Write a senior thesis (or even an independent study) and tell us the answer.

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