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Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?

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Author Info
Thomas J. Kane
Abstract

Though economists have spent the past decade analyzing the rising payoff to schooling, we know much less about the responses of youth or the effectiveness of policies aimed at influencing those decisions. States and the federal government currently spend more than $53 billion annually, hoping to promote greater access to college. This paper evaluates the price sensitivity of youth, using several sources of non-experimental variation in costs. The bulk of the evidence points to large enrollment impacts, particularly for low-income students and for those attending two-year colleges. The states have chosen to promote college enrollment by keeping tuition low through across-the-board subsidies rather than using more targeted, means-tested aid. As public enrollments increase, this has become an expensive strategy. Means-tested aid may be better targeted. However, the evidence of enrollment responses to such targeted aid is much weaker. After a federal means-tested grant program was established in 1973, there was no disproportionate increase in enrollment by low-income youth. Given the number of public dollars at stake, the two sets of results should be reconciled.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5164.

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Date of creation: Jul 1995
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Handle: RePEc:nbr:nberwo:5164

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I20 - Health, Education, and Welfare - - Education - - - General
I28 - Health, Education, and Welfare - - Education - - - Government Policy

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  1. Hans J. Baumgartner & Viktor Steiner, 2004. "Enrolment into Higher Education and Changes in Repayment Obligations of Student Aid: Microeconometric Evidence for Germany," Discussion Papers of DIW Berlin 444, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  2. Eliasson, Kent, 2006. "The Effects of Accessibility to University Education on Enrollment Decisions, Geographical Mobility, and Social Recruitment," UmeÃ¥ Economic Studies 690, Umeå University, Department of Economics. [Downloadable!]
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    Other versions:
  4. Roland Amann, 2004. "Policies in Tertiary Education and the Change in Attendance and Time-to-Degree," Working Papers of the Research Group Heterogenous Labor 04-18, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim. [Downloadable!]
  5. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series rwp01-034, Harvard University, John F. Kennedy School of Government. [Downloadable!]
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  6. Dynarski, Susan & Scott-Clayton, Judith, 2006. "The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics," Working Paper Series rwp06-013, Harvard University, John F. Kennedy School of Government. [Downloadable!]
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  7. Erik Canton & Andreas Blom, 2004. "Do student loans improve accessibility to higher education and student performance? An impact study of the SOFES program in Mexico," CPB Discussion Papers 33, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  8. Joshua Angrist & Eric Bettinger & Erik Bloom & Elizabeth King & Michael Kremer, 2001. "Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment," NBER Working Papers 8343, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Rebecca J. Acosta, 2001. "How Do Colleges Respond to Changes in Federal Student Aid?," UCLA Economics Working Papers 808, UCLA Department of Economics. [Downloadable!]
  10. Cory Koedel, 2009. "Postsecondary Education Structure," Working Papers 0906, Department of Economics, University of Missouri. [Downloadable!]
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  15. Hemelt, Steven W. & Marcotte, Dave E., 2008. "Rising Tuition and Enrollment in Public Higher Education," IZA Discussion Papers 3827, Institute for the Study of Labor (IZA). [Downloadable!]
  16. Hans J. Baumgartner & Viktor Steiner, 2006. "Does More Generous Student Aid Increase Enrolment Rates into Higher Education? Evaluating the German Student Aid Reform of 2001," IZA Discussion Papers 2034, Institute for the Study of Labor (IZA). [Downloadable!]
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  17. Bridget Terry Long, 2003. "The Impact of Federal Tax Credits for Higher Education Expenses," NBER Working Papers 9553, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Stephen V. Cameron & James J. Heckman, 1999. "The Dynamics of Educational Attainment for Blacks, Hispanics, and Whites," NBER Working Papers 7249, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. Bridget Terry Long, 2003. "Does the Format of a Financial Aid Program Matter? The Effect of State In-Kind Tuition Subsidies," NBER Working Papers 9720, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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