1 Apr 2008

Regulating How Drop-Out Rates Are Reported:
The tip of the iceberg of a persistent information quality problem

by Richard Belzer

in Information Quality

Department of Education secretary Margaret Spellings has announced a new regulation to control how states report drop-out rates. Under existing law, the states have the discretion to devise their own formulas. This makes interstate comparisons problematic. It also reflects the states' interest in devising formulae that under-report actual drop-out rates.

Under the proposed rule, all states would have to use the same federally prescribed formula. More...

19 Jan 2007

Using Regulation to Pay for Government Spending
Will increased subsidies for student loans benefit students?

by Richard Belzer

in Regulatory Economics, Legislation

The House of Representatives has passed legislation that would lower the interest rates on federally insured student loans. These changes increase federal budget outlays, and under new pay-as-you-go budgeting rules ("PAYGO"), revenues must be found to offset these increases. That's accomplished by changing the regulations under which lenders must operate to issue these loans.

To cover the estimated $7 billion outlays from reduced interest rates, new regulations will increase fees charged to lenders by an estimated $14 billion. If lenders pass on just half of these added costs to borrowers, all gains students obtain from the reduced interest rate will be offset by higher fees. If lenders pass on more than half, this student loan program could get smaller.

1 Dec 2006

Tuition Tax Deductions and Credits:
Is this a "middle class tax cut"?

by Richard Belzer

in Regulatory Economics, Regulatory Policy

The incoming Democratic Congress is promising to make college tuition "deductible from taxes, permanently." Elsewhere this is described as a "tax credit," which of course is very different. Tax deductibility is valued at the taxpayer's marginal tax bracket, but tax credits are worth 100% of their cash amount. In either case, the proposal is described as a "middle class tax cut."

The economics of both tax deductibility and tax credits are actually very different. The benefits of either policy are likely to be enjoyed mostly among those with the highest income. And, these benefits will be much smaller than expected because they will cause college tuition to rise.