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Students are better off with higher tuition & higher quality

Earlier this year the Oregon legislature agreed to increase spending on higher education, so long as universities agree to cut tuition increases. This latest working paper shows that it might have been better for our students – in terms of completion and time to degree – if UO had been free to spend the state money on improving advising and teaching instead:

The Impact of Price Caps and Spending Cuts on U.S. Postsecondary Attainment

David J. DemingChristopher R. Walters

NBER Working Paper No. 23736
Issued in August 2017

Increasing the postsecondary attainment rate of college-age youth is an important economic priority in the U.S. and in other developed countries. Yet little is known about whether different forms of public subsidy can increase degree completion. In this paper, we compare the impact of the marginal taxpayer dollar on postsecondary attainment when it is spent on lowering tuition prices versus increasing the quality of the college experience. We do so by estimating the causal impact of changes in tuition and spending on enrollment and degree completion in U.S. public postsecondary institutions between 1990 and 2013. We estimate these impacts using a newly assembled data set of legislative tuition caps and freezes, combined with variation in exposure to state budget shocks that is driven by differences in historical reliance on state appropriations. We find large impacts of spending on enrollment and degree completion. In contrast, we find no impact of price changes. Our estimates suggest that spending increases are more effective per-dollar than price cuts as a means of increasing postsecondary attainment.


  1. Hippo 11/20/2017

    No amount of two-stage least squares makes this causal inference convincing.

    • Dog 11/20/2017

      well I am currently giving a midterm exam in the same classroom I taught the same course in 25 years ago to essentially the same students.

      I don’t really care what the funding or non-funding source is nor do I care about what the investment or disinvestment is – I care about the evolution of higher education, which according to this sample of 1,
      is ZERO

  2. Simplius Simplicissimus 11/21/2017

    I wonder if this gem of analysis would differ in any way now that we know how the GOP tax plan hopes to tax grad students on tuition waivers and eliminate student loan interest deductions (among other higher ed disincentives)

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