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College Cost, Borrowing Constraints and the Timing of College Entry


  • Thomas J. Kane

    (Kennedy School of Government, Harvard University)


College students receive both direct subsidies in the form of grants and loans provided by the government and by educational institutions and indirect subsidies in the form of tuition levels which do not cover the full cost of education. This paper examines the distribution of each of these forms of subsidy to students at different income levels who attend public and private colleges and universities. Students in private colleges receive lower indirect subsidies, but significantly higher direct subsidies than do those in public colleges. The distribution of subsidies in the private sector is distinctly pro-poor, but this is not true in the public sector. Other findings include higher subsidies for undergraduates studying at four year colleges than for those in universities and significant saving of public funds on middle and upper-income students studying in private institutions.

Suggested Citation

  • Thomas J. Kane, 1996. "College Cost, Borrowing Constraints and the Timing of College Entry," Eastern Economic Journal, Eastern Economic Association, vol. 22(2), pages 181-194, Spring.
  • Handle: RePEc:eej:eeconj:v:22:y:1996:i:2:p:181-194

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    Education; Tuition;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy


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