Cash-on-hand and college enrollment: Evidence from population tax data and the earned Income Tax Credit

Abstract

We estimate causal effects of cash-on-hand on college enrollment decisions of students from low-income families. Using populationlevel, administrative data from US income tax returns, we exploit variation in tax refunds received in the spring of the high school senior year. The variation in tax refunds results from the kink point between the phase-in and maximum credit portions of the Earned Income Tax Credit schedule. The results suggest tax refunds received in the spring of the high school senior year have meaningful effects on college enrollment.