Tuition, Debt, and Human Capital

Chakrabarti, Rajashri; Fos, Vyacheslav; Liberman, Andres; Yannelis, Constantine

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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: D14; H52; H81; I23; J24;