Tuesday, April 23, 2019

New study finds little evidence that federal student loan limits drive tuition at professional schools (Michael Simkovic)

Robert Kelchen, Does the Bennett Hypothesis Hold in Professional Education? An Empirical Analysis, Research in Higher Education 1-26 (2019):

"Policymakers have been debating the Bennett Hypothesis—whether colleges increase tuition after the federal government increases access to student loans—for decades. Yet most of the prior research has focused on studying small changes to loan limits or Pell Grants for undergraduate students. In this study, I examine whether business schools (the most popular master’s program) and medical schools (one of the most-indebted programs) responded to a large increase in federal student loan limits in 2006 following the creation of the Grad PLUS program by raising tuition or living expenses as well as examining whether student debt burdens also increased. Using two quasi-experimental estimation strategies and program-level data from 2001 to 2016, I find little consistent evidence to support the Bennett Hypothesis in either medical or business schools."

Hat tip Frank Pasquale.


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