IDEAS home Printed from https://ideas.repec.org/a/eee/ecoedu/v89y2022ics0272775722000413.html
   My bibliography  Save this article

Making college affordable? The impacts of tuition freezes and caps

Author

Listed:
  • Miller, Lois
  • Park, Minseon

Abstract

We study how colleges’ “sticker price” and institutional financial aid change during and after tuition caps and freezes using a modified event study design. While tuition regulations lower sticker prices, colleges recoup losses by lowering financial aid or rapidly increasing tuition after regulations end. At four-year colleges, regulations lower sticker price by 6.3 percentage points while simultaneously reducing aid by nearly twice as much (11.3 percentage points). At two-year colleges, while regulations lower tuition by 9.3 percentage points, the effect disappears within three years of the end of the regulation. Changes in net tuition vary widely; focusing on four-year colleges, while some students receive discounts up to 5.9 percentage points, others pay 3.8 percentage points more than they would have without these regulations. Students who receive financial aid, enter college right after the regulation is lifted, or attend colleges that are more dependent on tuition benefit less.

Suggested Citation

  • Miller, Lois & Park, Minseon, 2022. "Making college affordable? The impacts of tuition freezes and caps," Economics of Education Review, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:ecoedu:v:89:y:2022:i:c:s0272775722000413
    DOI: 10.1016/j.econedurev.2022.102265
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0272775722000413
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econedurev.2022.102265?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fethke, Gary, 2005. "Strategic determination of higher education subsidies and tuitions," Economics of Education Review, Elsevier, vol. 24(5), pages 601-609, October.
    2. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    3. Jeffrey R. Brown & Caroline M. Hoxby, 2014. "How the Financial Crisis and Great Recession Affected Higher Education," NBER Books, National Bureau of Economic Research, Inc, number brow12-2, March.
    4. John Bound & Breno Braga & Gaurav Khanna & Sarah Turner, 2020. "A Passage to America: University Funding and International Students," American Economic Journal: Economic Policy, American Economic Association, vol. 12(1), pages 97-126, February.
    5. Anderson, Drew M., 2020. "When financial aid is scarce: The challenge of allocating college aid where it is needed most," Journal of Public Economics, Elsevier, vol. 190(C).
    6. Martha J. Bailey & Andrew Goodman-Bacon, 2015. "The War on Poverty's Experiment in Public Medicine: Community Health Centers and the Mortality of Older Americans," American Economic Review, American Economic Association, vol. 105(3), pages 1067-1104, March.
    7. Webber, Douglas A., 2017. "State divestment and tuition at public institutions," Economics of Education Review, Elsevier, vol. 60(C), pages 1-4.
    8. Elizabeth B. Clelan & Michael S. Kofoed, 2017. "The Effect Of The Business Cycle On Freshman Financial Aid," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 253-268, April.
    9. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    10. Chao Fu, 2014. "Equilibrium Tuition, Applications, Admissions, and Enrollment in the College Market," Journal of Political Economy, University of Chicago Press, vol. 122(2), pages 225-281.
    11. Chao Fu & Shoya Ishimaru & John Kennan, 2024. "Government Expenditure on the Public Education System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 43-73, February.
    12. John Bound & Breno Braga & Gaurav Khanna & Sarah Turner, 2019. "Public Universities: The Supply Side of Building a Skilled Workforce," NBER Working Papers 25945, National Bureau of Economic Research, Inc.
    13. Bound, John & Turner, Sarah, 2007. "Cohort crowding: How resources affect collegiate attainment," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 877-899, June.
    14. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    15. Michael Rizzo & Ronald G. Ehrenberg, 2004. "Resident and Nonresident Tuition and Enrollment at Flagship State Universities," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 303-354, National Bureau of Economic Research, Inc.
    16. Delaney, Jennifer A. & Kearney, Tyler D., 2015. "The impact of guaranteed tuition policies on postsecondary tuition levels: A difference-in-difference approach," Economics of Education Review, Elsevier, vol. 47(C), pages 80-99.
    17. Singell, Larry Jr. & Stone, Joe A., 2007. "For whom the Pell tolls: The response of university tuition to federal grants-in-aid," Economics of Education Review, Elsevier, vol. 26(3), pages 285-295, June.
    18. Ozan Jaquette & Edna Parra, 2016. "The Problem with the Delta Cost Project Database," Research in Higher Education, Springer;Association for Institutional Research, vol. 57(5), pages 630-651, August.
    19. Sandler, Danielle H. & Sandler, Ryan, 2014. "Multiple event studies in public finance and labor economics: A simulation study with applications," Journal of Economic and Social Measurement, IOS Press, issue 1-2, pages 31-57.
    20. Dennis Epple & Richard Romano & Holger Sieg, 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," Econometrica, Econometric Society, vol. 74(4), pages 885-928, July.
    21. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    22. Michael F. Dinerstein & Caroline M. Hoxby & Jonathan Meer & Pablo Villanueva, 2014. "Did the Fiscal Stimulus Work for Universities?," NBER Chapters, in: How the Financial Crisis and Great Recession Affected Higher Education, pages 263-320, National Bureau of Economic Research, Inc.
    23. Susan Dynarski & Judith Scott-Clayton, 2013. "Financial Aid Policy: Lessons from Research," NBER Working Papers 18710, National Bureau of Economic Research, Inc.
    24. Jennifer A. Delaney & Tyler D. Kearney, 2016. "Alternative Student-Based Revenue Streams for Higher Education Institutions: A Difference-in-Difference Analysis Using Guaranteed Tuition Policies," The Journal of Higher Education, Taylor & Francis Journals, vol. 87(5), pages 731-769, September.
    25. Eric Bettinger & Oded Gurantz & Laura Kawano & Bruce Sacerdote & Michael Stevens, 2019. "The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant," American Economic Journal: Economic Policy, American Economic Association, vol. 11(1), pages 64-94, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Acton, Riley K., 2022. "Is a name change a game change? The impact of college-to-university conversions," Economics of Education Review, Elsevier, vol. 88(C).
    2. Anderson, Drew M., 2020. "When financial aid is scarce: The challenge of allocating college aid where it is needed most," Journal of Public Economics, Elsevier, vol. 190(C).
    3. Mangrum, Daniel, 2022. "Personal finance education mandates and student loan repayment," Journal of Financial Economics, Elsevier, vol. 146(1), pages 1-26.
    4. Epple, Dennis & Romano, Richard & Sarpça, Sinan & Sieg, Holger, 2017. "A general equilibrium analysis of state and private colleges and access to higher education in the U.S," Journal of Public Economics, Elsevier, vol. 155(C), pages 164-178.
    5. John Bound & Breno Braga & Gaurav Khanna & Sarah Turner, 2019. "Public Universities: The Supply Side of Building a Skilled Workforce," NBER Working Papers 25945, National Bureau of Economic Research, Inc.
    6. Esra Kose & Siobhan M. O'Keefe & Maria Rosales-Rueda, 2022. "Does the Delivery of Primary Health Care Improve Birth Outcomes? Evidence from the Rollout of Community Health Centers," NBER Working Papers 30047, National Bureau of Economic Research, Inc.
    7. Tamara Bischof & Boris Kaiser, 2021. "Who cares when you close down? The effects of primary care practice closures on patients," Health Economics, John Wiley & Sons, Ltd., vol. 30(9), pages 2004-2025, September.
    8. Grey Gordon & Aaron Hedlund, 2017. "Accounting for the Rise in College Tuition," NBER Chapters, in: Education, Skills, and Technical Change: Implications for Future US GDP Growth, pages 357-394, National Bureau of Economic Research, Inc.
    9. Aaron Hedlund & Grey Gordon, 2017. "Accounting for Tuition Increases at U.S. Colleges," 2017 Meeting Papers 1550, Society for Economic Dynamics.
    10. Giulia Rossello, 2023. "The Effect of Government Cuts of Doctoral Scholarships on Science," LEM Papers Series 2023/33, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. Giulia Contu & Sara Pau, 2022. "The impact of TV series on tourism performance: the case of Game of Thrones," Empirical Economics, Springer, vol. 63(6), pages 3313-3341, December.
    12. Sarena Goodman & Alice Henriques Volz, 2020. "Attendance Spillovers between Public and For-Profit Colleges: Evidence from Statewide Variation in Appropriations for Higher Education," Education Finance and Policy, MIT Press, vol. 15(3), pages 428-456, Summer.
    13. Veronica Rattini, 2022. "The Effects of Financial Aid on Graduation and Labor Market Outcomes: New Evidence from Matched Education-Labor Data," CESifo Working Paper Series 10010, CESifo.
    14. Machado, Cecilia & Szerman, Christiane, 2021. "Centralized college admissions and student composition," Economics of Education Review, Elsevier, vol. 85(C).
    15. Bas Scheer & Wiljan van den Berge & Maarten Goos & Alan Manning & Anna Salomons, 2022. "Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling," CPB Discussion Paper 435, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Mac Clay, Pablo & Börner, Jan & Sellare, Jorge, 2023. "Institutional and macroeconomic stability mediate the effect of auctions on renewable energy capacity," Energy Policy, Elsevier, vol. 180(C).
    17. Alex Hollingsworth & Krzysztof Karbownik & Melissa A. Thomasson & Anthony Wray, 2022. "The Gift of a Lifetime: The Hospital, Modern Medicine, and Mortality," NBER Working Papers 30663, National Bureau of Economic Research, Inc.
    18. Stefan Bauernschuster & Michael Grimm & Cathy M. Hajo, 2023. "The Impact of Margaret Sanger’s Birth Control Clinics on Early 20th Century U.S. Fertility and Mortality," CESifo Working Paper Series 10421, CESifo.
    19. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    20. Jules Gazeaud & Victor Stephane, 2023. "Productive Workfare? Evidence from Ethiopia's Productive Safety Net Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 265-290, January.

    More about this item

    Keywords

    Cost of higher education; Tuition freezes/caps; Institutional financial aid;
    All these keywords.

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecoedu:v:89:y:2022:i:c:s0272775722000413. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/econedurev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.