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The impact of guaranteed tuition policies on postsecondary tuition levels: A difference-in-difference approach

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  • Delaney, Jennifer A.
  • Kearney, Tyler D.

Abstract

This study considers the impact of state-level guaranteed tuition programs on postsecondary tuition levels. The analytic framework argues that state-level laws requiring flat tuition rates for four years contain inflationary risk, which encourages institutions to set tuition higher than they otherwise would with annual adjustments. To empirically test this idea, this study uses a national panel dataset and a quasi-experimental difference-in-difference methodological approach, with Illinois’ Truth-in-Tuition law serving as the treatment condition. On average, institutions subject to this law increased annual tuition by approximately 26–30% and aggregate four-year tuition by approximately 6–7% in excess of the amount predicted by the trend for institutions not subject to the law. These findings are robust to multiple alternative specifications and support the idea that state-level guaranteed tuition programs encourage large institutional tuition increases. Implications of these findings for state policymakers, higher education institutional leaders, and college-age students and their families are also discussed.

Suggested Citation

  • Delaney, Jennifer A. & Kearney, Tyler D., 2015. "The impact of guaranteed tuition policies on postsecondary tuition levels: A difference-in-difference approach," Economics of Education Review, Elsevier, vol. 47(C), pages 80-99.
    • Handle: RePEc:eee:ecoedu:v:47:y:2015:i:c:p:80-99
    DOI: 10.1016/j.econedurev.2015.04.003
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    Cited by:

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    3. Shen Ying, 2021. "The Effects of the State Prepaid Tuition Program on College Attainment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 307-334, January.
    4. Ferraz, Diogo & Ribeiro de Oliveira, Fabíola Cristina, 2018. "Impact of the National Professional Qualification Program (PNQ) on Income: An Econometric Analysis in Piracicaba/SP-Brazil," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 28(2), pages 105-123.
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    More about this item

    Keywords

    Higher education; Finance; Policy; Quasi-experimental analysis; Difference-in-difference;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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