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Tuition, Debt, and Human Capital

Author

Listed:
  • Rajashri Chakrabarti
  • Vyacheslav Fos
  • Andres Liberman
  • Constantine Yannelis
  • Tarun Ramadorai

Abstract

This paper investigates the effects of college tuition on student debt and human capital accumulation. We exploit data from a random sample of undergraduate students in the United States and implement a research design that instruments for realized tuition with relatively large changes to the advertised tuition of students who enrolled at the same school in different cohorts. We find that $5,000 in higher tuition causally reduces the probability of graduating with a graduate degree by 3.1 percentage points and increases student debt by $1,480. Higher tuition also leads to a decline in mortgage balances and an increase in credit card delinquencies.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Rajashri Chakrabarti & Vyacheslav Fos & Andres Liberman & Constantine Yannelis & Tarun Ramadorai, 2023. "Tuition, Debt, and Human Capital," The Review of Financial Studies, Society for Financial Studies, vol. 36(4), pages 1667-1702.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:4:p:1667-1702.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhac065
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    Citations

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    Cited by:

    1. Azmat Ghazala & Simion Ştefania, 2021. "Charging for Higher Education: Estimating the Impact on Inequality and Student Outcomes," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 175-239, January.
    2. Matteo Binfarè & Kyle Zimmerschied, 2024. "The Role of Debt in Financing Higher Education," NBER Chapters, in: Financing Institutions of Higher Education, National Bureau of Economic Research, Inc.
    3. Lisa J. Dettling & Sarena Goodman & Sarah Reber, 2022. "Saving and Wealth Accumulation among Student Loan Borrowers: Implications for Retirement Preparedness," Finance and Economics Discussion Series 2022-019, Board of Governors of the Federal Reserve System (U.S.).
    4. Manso, Gustavo & Rivera, Alejandro & Wang, Hui (Grace) & Xia, Han, 2025. "Household debt overhang and human capital investment," Journal of Financial Economics, Elsevier, vol. 172(C).
    5. Sandra E. Black & Jeffrey T. Denning & Lisa J. Dettling & Sarena Goodman & Lesley J. Turner, 2023. "Taking It to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being," American Economic Review, American Economic Association, vol. 113(12), pages 3357-3400, December.
    6. Radhakrishnan Gopalan & Barton H. Hamilton & Jorge Sabat & David Sovich, 2024. "Aversion to Student Debt? Evidence from Low‐Wage Workers," Journal of Finance, American Finance Association, vol. 79(2), pages 1249-1295, April.
    7. Christa Gibbs & Benedict Guttman-Kenney & Donghoon Lee & Scott Nelson & Wilbert van der Klaauw & Jialan Wang, 2025. "Consumer Credit Reporting Data," Journal of Economic Literature, American Economic Association, vol. 63(2), pages 598-636, June.
    8. Guglielmo Briscese & John A. List & Sabrina Liu, 2025. "Navigating the College Affordability Crisis: Insights from College Savings Accounts," NBER Working Papers 34126, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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