The effects of tuition fees in higher education

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Higher education funding is increasingly a topic of heated national and international debate. In particular, the question if, and to what extent, students should contribute privately to the costs of their education has received intense attention. Over the past two decades, a number of countries introduced or raised tuition fees (e.g., Germany, England, and the USA), some abolished fees (e.g., Ireland and the aforementioned Germany), while others never introduced fees (e.g., the Nordic countries).Against this backdrop, the proposed project will examine the effect of the introduction and abolishment of tuition fees in Germany, both for prospective students (“extensive margin”) and for students who were already enrolled when tuition fees were introduced or abolished (“intensive margin”). The project will use administrative individual-level data for all students in Germany in combination with a difference-in-differences approach. This econometric approach exploits the German setting with the partial introduction of fees starting in 2006 and the subsequent staggered abolishment of fees between 2008 and 2014, which offers a unique natural experiment. The project will expand the existing literature on private costs in higher education in three important dimensions. First, the project will consider both the effects of introducing and abolishing fees, which need not be symmetric. Second, the project will study a broad range of different outcomes, including enrollment, completion, duration, subject choice, final grades, and migration to other states. Fees might have desired effects on some of these outcomes and undesired effects on others. Third, the project will study both extensive as well as intensive margin effects and not just one of them separately. This is particularly important because the existing literature suggests that extensive and intensive margin effects might go in opposite directions. Overall, this project aims to provide an overview of the effects of tuition fees at all margins and for various outcomes. Such comprehensive analysis is necessary and relevant - both from international and national perspectives, as well as from scientific and policy perspectives.