Working Paper Series, Center for Labor Studies,
Uppsala University, Department of Economics

Abstract: This paper examines the distributional impacts of direct college costs { that is, whether the response of educational decisions to college costs varies by student characteristics. The primary obstacle in estimating these e ects is the endogeneity of schooling costs. To overcome this issue, I use two measures of direct costs that are plausibly exogenous: living within commuting distance to a university and the elimination of the Social Security Student Bene t Program in the United States. Both sources of variation indicate that lower ability students are the most responsive to changes in college costs. In contrast, I nd that the e ect of both cost measures on college attendance and graduation does not substantially vary by family income, parent education, race or gender.

Keywords: Schooling Costs; Educational Attainment; Financial Aid Policy

JEL-codes: I20; I28; J24

38 pages, October 31, 2010

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