Tuition, Debt, and Human Capital
55 Pages Posted: 7 Feb 2020 Last revised: 28 Dec 2020
Date Written: December 28, 2020
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 US and implement a research design that instruments for realized tuition with relatively large changes to the advertised tuition of students who enrolled at the same school in different cohorts. We find that $5,000 in higher tuition causally reduces the probability of graduating with a graduate degree by 3.1 percentage points and increases student debt by $1,480. Higher tuition also reduces the probability of obtaining an undergraduate degree among poorer, credit-constrained students.
Keywords: tuition, student debt, human capital, credit constraints
JEL Classification: D14, H52, H81, I23, J24
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