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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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Miller, Lois & Park, Minseon, 2022. "Making college affordable? The impacts of tuition freezes and caps," Economics of Education Review, Elsevier, vol. 89(C).
    2. 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).
    3. 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).
    4. Junghee Choi, 2024. "Performance-Based Funding and Certificates at Public Four-Year Institutions," Research in Higher Education, Springer;Association for Institutional Research, vol. 65(6), pages 1065-1084, September.
    5. 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.
    6. Cook, Emily E. & Turner, Sarah, 2022. "Progressivity of pricing at US public universities," Economics of Education Review, Elsevier, vol. 88(C).
    7. 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.
    8. 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.
    9. Gaulke, Amanda P., 2022. "Returns to bachelor’s degree completion among stopouts," Economics of Education Review, Elsevier, vol. 86(C).
    10. 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.
    11. 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.
    12. Ortega, Alberto, 2020. "State partisanship and higher education," Economics of Education Review, Elsevier, vol. 76(C).
    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.).
    14. 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.

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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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