Tuition, Debt, and Human Capital
51 Pages Posted: 20 Jan 2017 Last revised: 6 Feb 2020
Date Written: April 18, 2017
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
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