Evaluating the Impact of Child Tax Credit (CTC) Policy on High School Graduation Rates

Background and purpose: Fifteen U.S. states and one district have implemented the Child Tax Credit (CTC) policy to reduce child poverty, support families with dependents, increase economic solvency, and promote child wellbeing. However, limited research has investigated the direct impact of the Child Tax Credit (CTC) policy on educational outcomes. This study uses bivariate analyses to explore the relationship between the CTC policy implementation and high school graduation rates. It also highlights the gap between financial aid policies and their long-term educational benefits.

Methods: This study utilizes a quantitative research framework that combines publicly available data sources, including educational government reports, state policy documentation, academically published research, official databases, and credible websites. This study assessed the graduation rates of the 15 states and one district before and after implementing the CTC policy. This study employed several statistical analyses to examine whether the relationship between the CTC policies and changes in graduation rates before and after the CTC policy implementation is statistically significant. A paired t-test was applied to compare the high school graduation rates during the program start (CTC Policy) and the 2024 high school graduation rates. Moreover, Levene’s test for equality of variances was used to evaluate homogeneity and ensure consistent variance in graduation rates over time. Pearson’s correlation analysis was conducted to assess the strength of the relationship between the implementation of the CTC policy and high school graduation rates.

Results: The results indicate that adopting the CTC policy led to a statistically significant increase in high school graduation rates. The average high school graduation rate in the year before implementing the CTC policy across these states and the district was 84.2%. Following the implementation of the policy, the rate increased to 91.04% in 2024. The study revealed unequal variances (F = 5.41), indicating a change in variability. Correlation analysis showed a positive correlation between the period of the CTC policy and graduation rates, further supporting the policy's effectiveness. The increase in graduation rates was particularly pronounced in states and the districts that provided higher CTC disbursement amounts, suggesting that economic support is crucial for educational improvement. Furthermore, the correlation between the years of the CTC policy extension and higher graduation rates implies that expanded financial support may produce cumulative advantages.

Conclusions and Implications: The findings specify that the CTC policy substantially impacts high school graduation rates, highlighting the importance of economic support programs in upgrading educational accomplishment. The decrease in variance also indicates an increase in the stability of graduation rates across different states and districts, which may contribute to reducing educational discrimination. These results emphasize the need for continuing and extended financial aid initiatives to promote long-term educational advances. Policymakers should consider the surviving benefits of sustaining and expanding the CTC programs to improve educational equity and stability, particularly in lower-income regions. Future research should explore additional socio-economic factors that impact graduation rates and the visible effects of financial assistance programs on child wellbeing.