Tuition, Debt, and Human Capital
54 Pages Posted: 7 Feb 2020 Last revised: 9 Jul 2020
Date Written: July 8, 2020
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
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