The Effect of University Tuition Fees on Children's Educational Aspirations

Presenter: Lena Hassani Nezhad, Royal Holloway, University of London

Education decisions and attitudes towards obtaining a university degree may be determined by expected costs and benefits of university study. The literature has recently raised the issue of relaxing the assumptions on how expectations are formed and there has been an increased interest in using subjective data to study expectations. While previous studies have mostly focused on the impact of the costs on parents’ views towards education of their children, the impact of such changes on children’s educational aspirations has not received much attention in the literature. We study the 2012-2013 higher education reform in the UK on education aspirations of children aged 10-15. Using a difference-in-difference estimator, we find that the reform is associated with an overall 2 percentage points decrease in aspirations towards obtaining a university degree. We also evaluate the heterogeneous impact of the tuition increase on study aspirations in different socio-economic groups and find a stronger discouragement effect among children from a lower socio-economic background: their university aspirations decreased by 3.8 percentage points. Our results suggest that expected costs for Higher Education can affect students many years prior to attending college and might lead to suboptimal human capital acquisition, despite existing funding schemes such as student loans that are designed to allow equal access to university. Our study contributes to the literature on economics of education by quantifying the impact of Higher Education costs on children’s aspirations towards education and sheds light on why so few students from lower socio-economic backgrounds choose to attain university degrees.