Staff Reports
Tuition, Debt, and Human Capital
Number 912
February 2020

JEL classification: D14, H52, H81, I23, J24

Authors: Rajashri Chakrabarti, Vyacheslav Fos, Andres Liberman, and Constantine Yannelis

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 tuition with relatively large changes to the tuition of students who enrolled at the same school in different cohorts. We find that $10,000 in higher tuition causally reduces the probability of graduating with a graduate degree by 6.2 percentage points and increases student debt by $2,961. Higher tuition also reduces the probability of obtaining an undergraduate degree among poorer, credit-constrained students. Thus, the relatively large increases in the price of education in the United States in the past decade can affect the accumulation of human capital.

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AUTHOR DISCLOSURE STATEMENT(S)
Rajashri Chakrabarti
The author declares that she has no relevant or material financial interests that relate to the research described in this paper.

Vyacheslav Fos
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.

Andres Liberman
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.

Constantine Yannelis
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.