Do tax credits have any effect on college outcomes? Research says “no.”

Allie Bidwell of U.S. News and World Report writes:

Obama’s Higher Education Tax Credit Reform Misses the Point

Part of President Barack Obama’s tax reform unveiled ahead of Tuesday’s State of the Union address would make changes to a higher education tax credit to benefit more low-income families. But some critics say that, while admirable, the proposed reform is misguided and may not do enough to ease the financial burden for college-bound low-income students.

The president’s proposal, revealed over the weekend, would make the American Opportunity Tax Credit a permanent part of the tax code. The credit was first created in 2009 and is set to expire in 2017. Low and middle-income families currently can receive tax benefits of up to $2,500 each year for four years for college expenses. Currently, the maximum refundable amount is $1,000 and the president wants to increase the amount to $1,500 by consolidating other higher education tax credits.

“We think the president focusing on the American Opportunity Tax Credit is a critical, critical effort to make sure resources are directed at the students that need them the most,” says Jeremie Greer, director of government affairs at the Corporation for Enterprise Development. “With many tax credits, but higher education as well, it’s largely skewed toward very wealthy students that probably would go to college whether they got these tax breaks or not. Really, the need should be to focus on students who do not have those opportunities.”