Tuition Reduction and Student Loan Debt: Evidence from the North Carolina Promise

William Zahran () and Daniel Klasik
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William Zahran: University of Florida
Daniel Klasik: University of North Carolina at Chapel Hill

Research in Higher Education, 2025, vol. 66, issue 6, No 1, 38 pages

Abstract: Abstract College promise programs can be found in every state in the country, though they vary widely in design. Most programs aim to reduce the tuition and fees students pay with the goal of increasing educational attainment and reducing the financial burden on students. The NC Promise policy functions in this space by reducing tuition for all students attending one of three campuses in the University of North Carolina (UNC) System. In this study, we investigate how NC Promise affects other sources of aid students receive, with a focus on whether it reduces student borrowing. Using student-level financial aid data from the University of North Carolina System, we employ a difference-in-difference framework to estimate the relationship between NC Promise and student loan debt. We find that NC Promise reduced student borrowing by approximately $1,100 per year among students with a family income above $55,000 who were already enrolled when NC Promise began. We also find a statistically significant decrease in state grants across multiple subgroups of students. We discuss how the design of NC Promise and similar financial aid programs can inform state policymaking to reduce student debt.

Keywords: Higher education; Student financial aid; Loans; State policy (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11162-025-09853-7

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