Making college affordable? The impacts of tuition freezes and caps

• Published in: Economics of education review 2022-08, Vol.89, p.102265, Article 102265
• Main Authors: Miller, Lois, Park, Minseon
• Format: Article
• Language: English
• Subjects: Cost of higher education; Institutional financial aid; Tuition freezes/caps
• ISSN: 0272-7757; 1873-7382
• DOI: 10.1016/j.econedurev.2022.102265

We study how colleges’ “sticker price” and institutional financial aid change during and after tuition caps and freezes using a modified event study design. While tuition regulations lower sticker prices, colleges recoup losses by lowering financial aid or rapidly increasing tuition after regulations end. At four-year colleges, regulations lower sticker price by 6.3 percentage points while simultaneously reducing aid by nearly twice as much (11.3 percentage points). At two-year colleges, while regulations lower tuition by 9.3 percentage points, the effect disappears within three years of the end of the regulation. Changes in net tuition vary widely; focusing on four-year colleges, while some students receive discounts up to 5.9 percentage points, others pay 3.8 percentage points more than they would have without these regulations. Students who receive financial aid, enter college right after the regulation is lifted, or attend colleges that are more dependent on tuition benefit less.