Tuition, Debt, and Human Capital

54 Pages Posted: 7 Feb 2020 Last revised: 9 Jul 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: July 8, 2020

Abstract

We exploit credit bureau data linked to administrative data of undergraduate students in the U.S. 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 years. $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. We conclude that large increases in the price of education have a negative effect on the accumulation of human capital.

Keywords: tuition, student debt, human capital, credit constraints

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

Suggested Citation

Chakrabarti, Rajashri and Fos, Vyacheslav and Liberman, Andres and Yannelis, Constantine, Tuition, Debt, and Human Capital (July 8, 2020). FRB of New York Staff Report No. 912, February 2020, NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3532593 or http://dx.doi.org/10.2139/ssrn.3532593

Rajashri Chakrabarti (Contact Author)

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

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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