The Impact of Education Tax Benefits on College Completion

•The paper examines the impact of education tax benefits on college completion.•I use a Propensity Score Matching (PSM) approach to correct for the endogeneity of tax benefits.•Results suggest that tax benefits increase the probability of completing a college degree.•The estimated effect of tax benefits is larger among students attending private and four-year institutions.

This paper uses a nationally representative sample from the 2004–09 Beginning Postsecondary Students (BPS) survey to examine the effect of education tax benefits on college completion. The paper employs a propensity score matching approach to correct for differences between eligible and ineligible students. Results suggest that tax benefits increase the likelihood of completing a college degree by 8 percentage points. The effect of tax benefits is largest for students who attended private and four-year institutions.