The Impact of Progressive Tuition Fees on Dropping Out of Higher Education: A Regression Discontinuity Design

In recent years, and under the pressure of increasing public deficits, a number of countries have decided to increase university fees to compensate for reductions in teaching subsidies financed by taxpayers. Perhaps the best known case is that of the UK. In this paper we analyze a similar policy adopted in Catalonia, Spain. Tuition fees increased 66 percent in the 2012-2013 academic year to compensate for the reduction in public subsidies used to finance Catalan university teaching activities. Interestingly, the increase in fees was progressive, meaning that there was a fee waiver in function of family income. We analyze the distributional impact of this policy change, showing that this progressive tuition fee does not have a differential impact on the dropout rate of students of different socioeconomic status. Since eligibility for the full tuition waiver is determined by a sharp cut-off on household income, we use a regression discontinuity design to analyze the effect of the new tuition fees around the full tuition waiver. We find no evidence of any adverse impact of the new fees on the drop out rates.