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College Cost, Borrowing Constraints and the Timing of College Entry

Author

Listed:
  • Thomas J. Kane

    (Kennedy School of Government, Harvard University)

Abstract

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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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume22/V22N2P181_194.pdf
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    References listed on IDEAS

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    Cited by:

    1. Salvador Navarro & Jin Zhou, 2017. "Identifying Agent's Information Sets: an Application to a Lifecycle Model of Schooling, Consumption, and Labor Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 58-92, April.
    2. Fenaba Addo, 2014. "Debt, Cohabitation, and Marriage in Young Adulthood," Demography, Springer;Population Association of America (PAA), vol. 51(5), pages 1677-1701, October.
    3. Jorge Rodríguez & Sergio Urzúa & Loreto Reyes, 2016. "Heterogeneous Economic Returns to Post-Secondary Degrees: Evidence from Chile," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 416-460.
    4. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, Elsevier.
    5. Rojas, Eugenio & Sánchez, Rafael & Villena, Mauricio G., 2016. "Credit constraints in higher education in a context of unobserved heterogeneity," Economics of Education Review, Elsevier, vol. 52(C), pages 225-250.
    6. Matthew T. Johnson, 2010. "Borrowing Constraints, College Enrollment, and Delayed Entry," Working Papers 2011-006, Human Capital and Economic Opportunity Working Group, revised Sep 2012.
    7. Matthew T. Johnson, 2013. "Borrowing Constraints, College Enrollment, and Delayed Entry," Journal of Labor Economics, University of Chicago Press, vol. 31(4), pages 669-725.
    8. John Bound & Sarah Turner, 2007. "Understanding the Increased Time to the Baccalaureate Degree," Discussion Papers 06-043, Stanford Institute for Economic Policy Research.
    9. Huang, Jin & Guo, Baorong & Kim, Youngmi & Sherraden, Michael, 2010. "Parental income, assets, borrowing constraints and children's post-secondary education," Children and Youth Services Review, Elsevier, vol. 32(4), pages 585-594, April.
    10. Alberto Tumino, 2013. "The effect of local labour market conditions on educational choices: a cross country comparison," ImPRovE Working Papers 13/06, Herman Deleeck Centre for Social Policy, University of Antwerp.
    11. Jones, Stephen, 2012. "The Effectiveness of Training for Displaced Workers with Long Prior Job Tenure," CLSSRN working papers clsrn_admin-2012-3, Vancouver School of Economics, revised 29 Jan 2012.
    12. Tomás Rau & Eugenio Rojas & Sergio Urzúa, 2013. "Loans for Higher Education: Does the Dream Come True?," NBER Working Papers 19138, National Bureau of Economic Research, Inc.
    13. Ralph Stinebrickner & Todd Stinebrickner, 2008. "The Effect of Credit Constraints on the College Drop-Out Decision: A Direct Approach Using a New Panel Study," American Economic Review, American Economic Association, vol. 98(5), pages 2163-2184, December.
    14. Nam, Yunju & Huang, Jin, 2009. "Equal opportunity for all? Parental economic resources and children's educational attainment," Children and Youth Services Review, Elsevier, vol. 31(6), pages 625-634, June.
    15. Salvador Navarro, 2011. "Using Observed Choices to Infer Agent's Information: Reconsidering the Importance of Borrowing Constraints, Uncertainty and Preferences in College Attendance," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20118, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    16. Kane, Thomas J., 1997. "Beyond Tax Relief: Long-Term Challenges in Financing Higher Education," National Tax Journal, National Tax Association, vol. 50(2), pages 335-49, June.
    17. Frenette, Marc, 2005. "Is Post-secondary Access More Equitable in Canada or the United States?," Analytical Studies Branch Research Paper Series 2005244e, Statistics Canada, Analytical Studies Branch.
    18. Bas Jacobs & Hongyan Yang, 2013. "Second-Best Income Taxation with Endogenous Human Capital and Borrowing Constraints," CESifo Working Paper Series 4155, CESifo Group Munich.
    19. Thompson, Fred & Zumeta, William, 2001. "Effects of key state policies on private colleges and universities: sustaining private-sector capacity in the face of the higher education access challenge," Economics of Education Review, Elsevier, vol. 20(6), pages 517-531, December.
    20. Lucia Nixon & Michael Robinson, 1999. "The educational attainment of young women: Role model effects of female high school faculty," Demography, Springer;Population Association of America (PAA), vol. 36(2), pages 185-194, May.
    21. Bas Jacobs & Hongyan Yang, 2016. "Second-best income taxation and education policy with endogenous human capital and borrowing constraints," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(2), pages 234-268, April.
    22. Kim, Youngmi & Sherraden, Michael, 2011. "Do parental assets matter for children's educational attainment?: Evidence from mediation tests," Children and Youth Services Review, Elsevier, vol. 33(6), pages 969-979, June.
    23. Kane, Thomas J., 1997. "Beyond Tax Relief: Long-Term Challenges in Financing Higher Education," National Tax Journal, National Tax Association, vol. 50(2), pages 335-349, June.

    More about this item

    Keywords

    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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