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State divestment and tuition at public institutions

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  • Webber, Douglas A.

Abstract

This study examines the pass-through rate of changes in public funding to tuition and fees paid by students. Using an instrumental variable-fixed effects identification strategy, I estimate that a $1000 per student decrease in funding leads to the typical student paying $257 more each year in costs, with. However, both the pass-through rate and the proportion of tuition increases which can be explained by state divestment have increased over time. The pass-through rate increased from 10.3% prior to the year 2000 to 31.8% post-2000. I outline several avenues of future research which should be pursued in order to more fully understand which students shoulder the burden of reductions in public support.

Suggested Citation

  • Webber, Douglas A., 2017. "State divestment and tuition at public institutions," Economics of Education Review, Elsevier, vol. 60(C), pages 1-4.
    • Handle: RePEc:eee:ecoedu:v:60:y:2017:i:c:p:1-4
    DOI: 10.1016/j.econedurev.2017.07.007
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    References listed on IDEAS

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    1. John Bound & Breno Braga & Gaurav Khanna & Sarah Turner, 2020. "A Passage to America: University Funding and International Students," American Economic Journal: Economic Policy, American Economic Association, vol. 12(1), pages 97-126, February.
    2. Elizabeth B. Clelan & Michael S. Kofoed, 2017. "The Effect Of The Business Cycle On Freshman Financial Aid," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 253-268, April.
    3. Page, Lindsay C. & Scott-Clayton, Judith, 2016. "Improving college access in the United States: Barriers and policy responses," Economics of Education Review, Elsevier, vol. 51(C), pages 4-22.
    4. Michael Rizzo & Ronald G. Ehrenberg, 2004. "Resident and Nonresident Tuition and Enrollment at Flagship State Universities," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 303-354, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Matthew Baird & Michael S. Kofoed & Trey Miller & Jennie Wenger, 2022. "Veteran Educators or For‐Profiteers? Tuition Responses to Changes in the Post‐9/11 GI Bill," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(4), pages 1012-1039, September.
    2. Cook, Emily E. & Turner, Sarah, 2022. "Progressivity of pricing at US public universities," Economics of Education Review, Elsevier, vol. 88(C).
    3. Ege Aksu & Sidhya Balakrishnan & Eric Bettinger & Jonathan S. Hartley & Michael S. Kofoed & Dubravka Ritter & Douglas A. Webber, 2024. "Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection"," Working Papers 24-07, Federal Reserve Bank of Philadelphia.
    4. Gaulke, Amanda P., 2022. "Returns to bachelor’s degree completion among stopouts," Economics of Education Review, Elsevier, vol. 86(C).
    5. Ortega, Alberto, 2020. "State partisanship and higher education," Economics of Education Review, Elsevier, vol. 76(C).
    6. John Bound & Breno Braga & Gaurav Khanna & Sarah Turner, 2019. "Public Universities: The Supply Side of Building a Skilled Workforce," NBER Working Papers 25945, National Bureau of Economic Research, Inc.
    7. Miller, Lois & Park, Minseon, 2022. "Making college affordable? The impacts of tuition freezes and caps," Economics of Education Review, Elsevier, vol. 89(C).
    8. Anderson, Drew M., 2020. "When financial aid is scarce: The challenge of allocating college aid where it is needed most," Journal of Public Economics, Elsevier, vol. 190(C).
    9. Faria, João Ricardo & Ferreira, João J. & Johnson, Ken H. & Mixon, Franklin G. & Wanke, Peter F., 2020. "Agglomeration economies and university program creation in the knowledge economy," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    10. Richard J. Greenfield & Ermasova Natalia, 2023. "Disinvestment in Higher Education and its Impact on Society: Case of Illinois Public Universities," Public Organization Review, Springer, vol. 23(4), pages 1311-1332, December.
    11. Bo Zhao, 2018. "State disinvestment in higher education: the impact on public research universities' patent applications," Working Papers 19-2, Federal Reserve Bank of Boston.
    12. Sarena Goodman & Alice Henriques Volz, 2020. "Attendance Spillovers between Public and For-Profit Colleges: Evidence from Statewide Variation in Appropriations for Higher Education," Education Finance and Policy, MIT Press, vol. 15(3), pages 428-456, Summer.
    13. Maarten De Ridder & Simona Hannon & Damjan Pfajfar, 2020. "The Multiplier Effect of Education Expenditure," Finance and Economics Discussion Series 2020-058, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

    State divestment; Tuition; Public higher education;
    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
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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