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Tuition, Debt, and Human Capital

System Working Paper 20-01 | Published February 12, 2020

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Vyacheslav Fos Boston College, Carroll School of Management

Andres Liberman NYU, Stern School of Business

Constantine Yannelis University of Chicago, Booth School of Business

Tuition, Debt, and Human Capital


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.