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

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  • 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.

Suggested Citation

  • Thomas J. Kane, 1995. "Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?," NBER Working Papers 5164, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5164
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    References listed on IDEAS

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    1. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers 678, Princeton University, Department of Economics, Industrial Relations Section..
    2. David Card & Lawrence Katz & Alan Krueger, 1993. "Comment on David Neumark and William Wascher, 'Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws'," Working Papers 695, Princeton University, Department of Economics, Industrial Relations Section..
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    5. Thomas J. Kane & Cecilia E. Rouse, 1993. "Labor Market Returns to Two- And Four-Year College: Is a Credit a Credit And Do Degrees Matter?," Working Papers 690, Princeton University, Department of Economics, Industrial Relations Section..
    6. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-553, September.
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    9. Thomas J. Kane & Cecilia Rouse, 1993. "Labor Market Returns to Two- And Four-Year College: Is A Credit a Credit And Do Degrees Matter?," Working Papers 690, Princeton University, Department of Economics, Industrial Relations Section..
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    11. John Bishop, 1977. "The Effect of Public Policies on the Demand for Higher Education," Journal of Human Resources, University of Wisconsin Press, vol. 12(3), pages 285-307.
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    13. McPherson, Michael S & Schapiro, Morton Owen, 1991. "Does Student Aid Affect College Enrollment? New Evidence on a Persistent Controversy," American Economic Review, American Economic Association, vol. 81(1), pages 309-318, March.
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    More about this item

    JEL classification:

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

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