Tuition, Debt, and Human Capital

51 Pages Posted: 20 Jan 2017 Last revised: 6 Feb 2020

See all articles by Rajashri Chakrabarti

Rajashri Chakrabarti

Federal Reserve Bank of New York

Vyacheslav Fos

Boston College - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Andres Liberman

New York University (NYU) - Department of Finance

Constantine Yannelis

University of Chicago Booth School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: April 18, 2017

Abstract

This paper investigates the effects of college tuition on student debt and human capital accumulation. We exploit data from a random sample of undergraduate students in the United States and implement a research design that instruments for tuition with relatively large changes to the tuition of students who enrolled at the same school in different cohorts. We find that $10,000 in higher tuition causally reduces the probability of graduating with a graduate degree by 6.2 percentage points and increases student debt by $2,961. Higher tuition also reduces the probability of obtaining an undergraduate degree among poorer, credit-constrained students. Thus, the relatively large increases in the price of education in the United States in the past decade can affect the accumulation of human capital.

Keywords: Student Debt, Human Capital, Postgraduate Education, Credit Constraints, Debt Overhang

JEL Classification: D14, H52, H81, J24, I23

Suggested Citation

Chakrabarti, Rajashri and Fos, Vyacheslav and Liberman, Andres and Yannelis, Constantine, Tuition, Debt, and Human Capital (April 18, 2017). Available at SSRN: https://ssrn.com/abstract=2901631 or http://dx.doi.org/10.2139/ssrn.2901631

Rajashri Chakrabarti

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

HOME PAGE: http://nyfedeconomists.org/chakrabarti

Vyacheslav Fos

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Andres Liberman (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

HOME PAGE: http://pages.stern.nyu.edu/~aliberma/

Constantine Yannelis

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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