Report

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 tuition with relatively large changes to the tuition of students who enrolled at the same school in different cohorts. We find that $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. Thus, the relatively large increases in the price of education in the United States in the past decade can affect the accumulation of human capital.

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

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

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Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2020-02-05

Volume: _

Pages: 51