Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19024
Authors: 
Dur, Robert A. J.
Glazer, Amihai
Year of Publication: 
2005
Series/Report no.: 
CESifo Working Paper 1560
Abstract: 
We explain why means-tested college tuition and means-tested government grants to college students can be efficient. The critical idea is that attending college is both an investment good and a consumption good. If education has a consumption benefit and tuition is uniform, the marginal rich student is less smart than some poor people who choose not to attend college, thus reducing the social returns to education and increasing the college's cost of education. We find that competition among profit-maximizing colleges results in means-tested tuition. In addition, to maximize the social returns to education government should means-test grants. We thus provide a rationale for means-tested tuition and grants which relies neither on capital market imperfections nor on redistributive objectives.
Subjects: 
tuition policy
education subsidies
self-selection
JEL: 
I2
H52
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.