Chapter 1. Chapter 14

Step 1

Work It Out

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You must read each slide, and complete any questions on the slide, in sequence.

Question

If Congress passed a privacy law making it illegal for colleges to ask for parents’ tax returns, that would tend to help students from bBQ2B3zLYZw/qyNaBjPtQC3qr8HmbfvbgcuuTA== families.

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Correct! The availability of parent tax returns allows colleges to determine willingness to pay and charge accordingly through the allocation of financial aid, leading higher-income families to pay more. Without access to tax returns, higher-income families would see a reduction in the amount they have to pay after accounting for financial aid.

Sorry! Think about the information that colleges are able to glean from tax returns and how that information would influence the amount of financial aid allocated to each family. To review price discrimination, please see the section “Price Discrimination Is Common.”