New Research Highlights How States Can Increase College Access and Affordability

WASHINGTON, Sept. 9, 2024 /PRNewswire/ -- Education Finance Council (EFC), the national trade association representing nonprofit and state-based higher education finance organizations, published a new research brief titled, "How States Use Tax Incentives to Make College More Affordable for Their Residents." The paper gathers previously released and original data to detail how states leverage 529 college savings plans and Qualified Student Loan Bonds (QSLB) to make postsecondary education more accessible and cost-effective for students.

"Student grant aid programs are an enormously important tool to encourage college access and completion. State-sponsored college savings plans and QSLBs play a similarly crucial role in facilitating positive outcomes, yet these significant policies fly under the radar in the national conversation on higher education reform." said EFC President Gail daMota.

EFC's research brief uses several case studies to show how qualified tuition plans and state-based, nonprofit student loan programs reduce the financial burden of obtaining a higher education degree:

• Evidence suggests that a state's nominal investment in a child's education savings at birth can dramatically increase the diversity of families that have a substantial and designated fund for higher education expenses 14 years later.
• States that issue tax-exempt bonds for nonprofit student loan programs can give students struggling with college costs a loan with an interest rate nearly 5 percentage points cheaper than a loan they would find in the private, for-profit marketplace.

Combined, these two tax-related policies can save postsecondary students thousands of dollars a year and make the dream of higher education attainment more financially manageable.

"State and federal policymakers motivated to help their residents find fulfilling higher education pathways should use the tax code to their advantage," added daMota. "Growing 529 plan accounts and expanding QSLBs are two proven strategies to increase higher education enrollment among families from low-income backgrounds and help borrowers save thousands of dollars during repayment."

EFC members work closely with students and families to help them make the best possible decision given their unique circumstances. Many students and their parents may find an education loan from a nonprofit organization a better option than a Parent PLUS Loan or private, for-profit student loan. EFC members promote borrower success by offering low-cost loans with transparent terms and by providing tailored guidance every step of an individual's educational journey.

Background: EFC is the national trade association representing nonprofit and state-based higher education finance organizations that are dedicated to improving college access, success, and affordability in their states and nationwide. Learn more about EFC by visiting efc.org.

CONTACT: Alex Ricci
(202) 552-8500
[email protected]

SOURCE Education Finance Council