Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?

45 Pages Posted: 12 Jul 2000 Last revised: 31 Aug 2010

See all articles by Thomas J. Kane

Thomas J. Kane

University of California, Los Angeles (UCLA) - School of Public Policy & Social Research; National Bureau of Economic Research (NBER)

Date Written: July 1995

Abstract

Though economists have spent the past decade analyzing the rising payoff to schooling, we know much less about the responses of youth or the effectiveness of policies aimed at influencing those decisions. States and the federal government currently spend more than $53 billion annually, hoping to promote greater access to college. This paper evaluates the price sensitivity of youth, using several sources of non-experimental variation in costs. The bulk of the evidence points to large enrollment impacts, particularly for low-income students and for those attending two-year colleges. The states have chosen to promote college enrollment by keeping tuition low through across-the-board subsidies rather than using more targeted, means-tested aid. As public enrollments increase, this has become an expensive strategy. Means-tested aid may be better targeted. However, the evidence of enrollment responses to such targeted aid is much weaker. After a federal means-tested grant program was established in 1973, there was no disproportionate increase in enrollment by low-income youth. Given the number of public dollars at stake, the two sets of results should be reconciled.

Suggested Citation

Kane, Thomas J., Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College? (July 1995). NBER Working Paper No. w5164. Available at SSRN: https://ssrn.com/abstract=225228

Thomas J. Kane (Contact Author)

University of California, Los Angeles (UCLA) - School of Public Policy & Social Research ( email )

Box 951656
Los Angeles, CA 90095
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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