Make Second Stimulus Payments Tax-Deductible For Online Learning
In a rush to introduce and pass legislation, Congress signed the CARES Act in April, which included very generous unemployment insurance (UI) benefits. Depending on the state and/or industry, some people may have even received more money in unemployment than they would have if they had returned to work—a phenomenon known as “moral hazard.”
Because economic contractions are costly and generate volatility, UI can serve an important role in helping people smooth consumption across good and bad times. But, the moral hazard effect can sometimes offset the consumption smoothing effect by discouraging people from finding a job.
While these features of the CARES Act were understandable given the significant uncertainty at the onset of the pandemic, we now have an opportunity to tailor benefits more towards individual circumstances.
Get started on your cybersecurity degree at American Military University.
But, what’s next for round two?
Learn So You Can Learn
While schools and universities across the board closed their campuses over the past four months, many have extended these plans for another year. The prospect of not having access to in-person learning resources and socialization may radically change the cost-benefit decision-making calculus for students and whether they believe that a college degree is worth the cost.
The coronavirus exacerbates already challenging features inherent in higher education, ranging from the declining college premium to the surging student debt. Many universities are trying to cope by shifting courses online and, in some cases, cutting faculty salaries even among tenured faculty.
In contrast to traditional brick-and-mortar institutions, online learning (“EdTech companies”) has surged over the pandemic. For example, Jeff Maggioncalda, CEO of Coursera, remarked that “Since the mid-March period, we saw 14 million new registered learners, we now have 64 million learners and almost 30 million course enrollments. This is up 500% from the same period a year ago.”
This is not just an isolated example. My ongoing joint research with coauthors Rene Kizilcec and Katharine Sadowski on data from DataCamp points towards a sustained increase in the demand for online learning—new users are joining and existing users are increasing activity, particularly in states that implemented stay-at-home orders. And, we’re finding this effect across all zipcodes—not just wealthy ones, suggesting that the expansion of online learning is helping to “lift all boats.”
Moreover, increasing evidence suggests that online learning is as effective as in-person learning if done right, particularly in science, technology, engineering and mathematics (STEM) degree programs. In fact, there are clever ways to leverage technology to keep students engaged and monitor their attentiveness. That’s great news given the growing demand for STEM jobs, especially cybersecurity.
Make Stimulus Payments Tax-Deductible
Let’s say round two of the stimulus passes soon. Even if Congress does a better job tailoring UI benefits based on individual circumstances, that, at best, just tides currently unemployed workers over for another few months.
Is there a better way forward? Imagine we could embed UI benefits with incentives for learning so that more individuals come out of the pandemic with new skills and a renewed mind, optimistic for the future.
Rather than just giving people UI to stay home, UI benefits could be made tax-deductible if used for educational investments, giving them even more “bang for their buck.” For example, recipients who use their funds to pay for tuition, digital certificates, or other training investments could receive a tax credit at the end of the year. The rapid expansion of EdTech providers has dramatically changed the educational services landscape and increased quality, so learners have a lot of options at their disposal.
The burgeoning digital economy and the the pace of technological change has the potential to generate substantial gains in productivity and human flourishing. But, it requires that we each one of us takes ownership over our learning outcomes. While the unemployment crisis might seem severe now, it will grow even more intense and risks leaving many people behind if we do not keep learning.