Estimating students’ valuation for college experiences

Quantifying the consumption value of college – the utility students derive from in-person instruction and on-campus social activities – has been challenging. We leverage the COVID-19 shock to elicit students’ intended likelihood of enrolling in higher education under different costs and possible states of the world, that vary in terms of class formats (i.e., in-person vs. remote instruction) and restrictions to campus social life. We show how such data can be used to recover students’ willingness-to-pay (WTP) for college-related activities in the absence of COVID-19, without parametric assumptions on the underlying heterogeneity in WTP. We find that the average WTP for in-person instruction (relative to a remote format) represents around 6.5% of the average annual net cost of attending university, while the average WTP for on-campus social activities is 10.2% of the average annual net costs. Lower-income and first-generation derive substantially lower value from university social life, partly due to time and resource constraints. Beyond providing an explanation for why college persistence rates may differ by socioeconomic background, our results have implications for how college costs should be structured.