Student Loan Debt Response to Tuition Changes

Zachary Jacob Dowdy and Tennecia Dacass

The American Economist, 2024, vol. 69, issue 1, 108-134

Abstract: Amid rising concerns regarding student loan debt, we examine the effect of Washington State’s College Affordability Program introduced in 2015 on undergraduate student loan debt to provide policy-makers with additional tools to help prevent another student loan debt crisis. The program reduced tuition for resident full-time undergraduate students at public colleges and universities for two consecutive academic years. This policy adoption created a natural experiment that we exploit to identify a causal link between tuition and loans. Using college-level data for the 2009–2010 through 2021–2022 academic years and employing a difference-in-differences model in conjunction with nearest-neighbor matching, we show that a decrease in college tuition following the adoption of the College Affordability Program caused a $637.96 (9 percentage-point) decline in average loans among first-time, full-time undergraduates in Washington State relative to undergraduates from matched U.S. schools. JEL Codes: G28, I22

Keywords: college tuition; student loans; state policy (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:69:y:2024:i:1:p:108-134

DOI: 10.1177/05694345231192981

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