Increased spending at colleges and universities — particularly mid-tier public institutions — leads to greater degree completion, but lower tuition costs do not.
That is the key finding of a new working paper released this week by the National Bureau of Economic Research, or NBER.
The paper — titled “The Impact of Price Caps and Spending Cuts to US Postsecondary Attainment” — was produced by Dr. David J. Deming of the Harvard Graduate School of Education, and Dr. Christopher R. Walters of the economics department at the University of California, Berkeley.
Their paper found “large causal impacts of spending — but not tuition,” on attainment rates at both two-year and four-year institutions and across different degrees and certificates.
“Our results suggest that efforts to reduce college costs — holding spending constant — may have little impact on degree attainment,” the paper states. “Broadly speaking, this pattern of results helps to explain why the move of many states over the past several decades toward a lower-spending, lower-tuition equilibrium has led to increases in the share of students who are enrolled part-time, and to higher college dropout rates.”
The researchers used data from the federal Integrated Postsecondary Education Data System, an annual survey of state support for higher education, and other sources, to perform their study.
They looked at enrollment and completion patterns over time and found that spending increases had larger impacts on enrollment in subsequent years. The effects were larger at two-year-institutions. For instance, a ten percent increase in total spending at two-year institutions boosted enrollment by ten percent over the next three years following the year of the increase. At four-year institutions, they found a ten percent increase in spending led to a 2.4 percent increase in enrollment during the initial year, 4.7, 6.6 and 5.7 percent in the following three years, respectively.
