Tuition, Debt, and Human Capital

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