The Effect of the Availability of Student Credit on Tuition: Testing the Bennett Hypothesis Using Evidence from a Large-Scale Student Loan Program in Brazil

Joao M. P. De Mello () and Isabela Ferreira Duarte ()

Economía Journal, 2020, vol. Volume 20, Number 2, issue Spring 2020, 179-222

Abstract: Exploring the expansion of FIES—a large student lending program in Brazil— we test whether eligibility for subsidized student lending causes tuition to rise, in accordance with the Bennett hypothesis. FIES rules created arguably exogenous variation in eligibility across different majors and higher education institutions, which we exploit in a difference-indifferences framework. Using unique information on tuition, we document that FIES eligibility caused tuition to rise. We then estimate a structural demand model to explore whether a reduction in the sensitivity of demand to price increases is one of the possible mechanisms behind this credit-driven tuition rise. Our results show that FIES expansion is associated with a reduction in the tuition elasticity of demand.

Keywords: Student lending; tuition inflation; policy evaluation (search for similar items in EconPapers)
JEL-codes: D04 D12 I22 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://economia.lacea.org/contents.htm

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000425:019761

Access Statistics for this article

More articles in Economía Journal from The Latin American and Caribbean Economic Association - LACEA Contact information at EDIRC.
Bibliographic data for series maintained by LACEA ().