TY  - JOUR
AU  - Dick,Andrew W.
AU  - Edlin,Aaron S.
TI  - The Implicit Taxes from College Financial Aid
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5316
PY  - 1995
Y2  - October 1995
UR  - http://www.nber.org/papers/w5316
L1  - http://www.nber.org/papers/w5316.pdf
N1  - Author contact info:
Andrew Dick
RAND Corporation
E-Mail: andrew_dick@rand.org

Aaron Edlin
The Richard W. Jennings '39 Endowed Chair
University of California, Berkeley
Department of Economics and School of Law
Berkeley, CA   94720-7200
Tel: 510/642-4719
Fax: 510/642-3767
E-Mail: edlin@econ.berkeley.edu
AB  - Families who heed the 'experts'' advice and save for their children's college education typically receive less financial aid. The variation in the net price of college functions as a large tax on savings.  College financial aid also functions as an income tax.  This paper estimates the size and determinants of these income and asset taxes.  We find that the marginal income tax typically ranges from 2% to 16% and the marginal asset levy from somewhat under 10% to as high as 25%.  If a typical family chooses to accumulate $100,000 in assets rather than consuming these resources, it loses financial aid worth $10,000-$20,000.
ER  -