From the U.S. Government Accountability Office, www.gao.gov Transcript for: Assistance for Families Paying for College Description: Audio interview by GAO staff with George Scott, Director, Education, Workforce and Income Related GAO Work: GAO-12-560: Higher Education: Improved Tax Information Could Help Families Pay for College Released: June 2012 [Background Music] [Narrator:] Welcome to GAO's Watchdog Report, your source for news and information from the Government Accountability Office. It's June, 2012. The federal government provides billions of dollars in assistance each year to students and families pursuing higher education. This assistance is available through aid programs authorized under Title IV of the Higher Education Act of 1965, and from tax credits and deductions. A group co-led by George Scott, a director in GAO's Education, Workforce and Income Security team recently reviewed some of the issues around this assistance. GAO's Jeremy Cluchey sat down with George to learn about what they found. [ Jeremy Cluchey: ] What does Title IV authorize in terms of aid to students and families for higher education? [ George Scott: ] Out of the Higher Education Act, Title IV of the Act authorizes what is traditionally known as the Federal Student Aid programs. Those include what's very well known as Pell Grants, as well as federal student loans for both students and parents, and additionally there are a couple of smaller programs, the campus-based study programs such as Federal Work-Study programs that I'm sure students are very familiar with. So, those generally are the key higher education programs. [ Jeremy Cluchey: ] And can you talk about some of the tax credits and deductions that can also help in this area that you also looked at in this report? [ George Scott: ] Certainly. As part of this report in addition to the Federal Student Aid programs, we also looked at the tax expenditures that are available to tax filers for higher education expenses including the American Opportunity Credit, the Lifetime Learning Credit, as well as deductions for tuition and fees, student loan interests, and also the very popular 529 Savings Plans. While not as widely known, these tax credits and deductions deliver a significant amount of aid to students to the tune of about $30 billion a year. [ Jeremy Cluchey: ] Your team looked in particular at the extent to which tax filers maximize their potential tax benefits through these different sources of assistance. What did you find? [ George Scott: ] Interestingly, this report sort of builds on some prior work we've done. Since 2005, we have repeatedly found that some taxpayers failed to claim certain credits or deductions for which they appear eligible. For the 2009 Tax Year, we found that about $1.5 million returns failed to claim either the credit or the deduction. On average, they missed claiming benefits of about $466 for a total of about $726 million, which is a significant amount. [ Jeremy Cluchey: ] Your team also looked at research on the impact that aid has on student outcomes. Can you talk a little bit about what you found there? [ George Scott: ] Certainly. As we looked at the range of research that's been conducted recently looking at the impact of Federal Student Aid programs and tax expenditures on a range of student issues particularly student outcomes and what we've found is despite sort of repeated attempts, research on…in this area remains very limited. We actually have spent a good amount of time talking with folks at the Department of Education about this and while we recognized there are a number of challenges in conducting this evaluative research, we still continue to believe it's important that we really know whether these programs are effective. [ Jeremy Cluchey: ] And that leads into one of your recommendations. Can you talk a little bit about the recommendations that GAO is making in this report? [ George Scott: ] Certainly. Based on the work we've done we're making a number of recommendations both to the Department of Education and to the Internal Revenue Service. To help address this issue that many tax filers are not claiming deductions or claiming deductions that are not most beneficial to them, we're recommending that the Department of Education and the Internal Revenue Service work together, both to sort of better understand who these taxpayers are who may not be filing or claiming these deductions for which they are eligible and also improving their outreach to help those filers. And we're also making a recommendation to the Department of Education that it conduct more evaluative research on Federal Student Aid programs and tax expenditures so that we know more about what's working in this area. [ Background Music ] [ Narrator: ] To learn more, visit GAO's website at gao.gov and be sure to tune in to the next edition of GAO's Watchdog Report for more from the congressional watchdog, the Government Accountability Office.