Tuition, Debt, and Human Capital
73 Pages Posted: 7 Feb 2020 Last revised: 25 Feb 2022
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Tuition, Debt, and Human Capital
Date Written: December 28, 2020
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 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 students.
Keywords: tuition, student debt, human capital, credit constraints
JEL Classification: D14, H52, H81, I23, J24
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