Review of Financial Studies Vol. 36 No. 4 2023

Tuition, Debt, and Human Capital

Rajashri Chakrabarti¹; Vyacheslav Fos²; Andres Liberman³; Constantine Yannelis⁴

¹ Federal Reserve Bank of New York, USA · ² Carroll School of Management, Boston College , USA · ³ Betterfly , Santiago, Chile · ⁴ Booth School of Business, the University of Chicago , USA

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 leads to a decline in mortgage balances and an increase in credit card delinquencies.

DOI

10.1093/rfs/hhac065

Volume

36

Issue

4

Pages

1667-1702

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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