The effects of tuition fees in higher education

• Applicants: Professor Dr. Jan Marcus; Professor Felix Weinhardt, Ph.D.
• Subject Area: Statistics and Econometrics ; Economic Policy, Applied Economics
• Term: from 2019 to 2024
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 422637099

• Final Report Year: 2025

Final Report Abstract

Education plays a vital role in innovation, growth, and societal welfare, while also offering individuals higher earnings and better health outcomes. Given these benefits, the question of who should bear the cost of higher education has sparked global debates. The project contributes to putting these debates on a better empirical basis, by examining the impact of tuition fees on both prospective and incumbent university students in Germany, providing evidence on the effects of switching from a no-fee to a fee-based system and vice vera. Given that a quarter of OECD countries do not charge tuition fees and many others are reconsidering their fee policies, the findings are also highly relevant for policymakers. The project consists of two strongly connected subprojects, leveraging the introduction of fees in 2006/07 and their abolition between 2008 and 2014 and using administrative data from the German Final Examination Register and Student Statistics. The first part focuses on incumbent students, exploiting the unusual lack of grandfathering in Germany’s tuition fee introduction, which meant fees applied even to those already enrolled. Using a difference-in-differences approach, supplemented with methods suited for staggered treatments, the study finds that the abolition of fees led to students taking longer to complete their degrees, mirroring the effect that the introduction of tuition fees had accelerated graduation. However, fees had little impact on final grades, subject choice, or university mobility. The second part investigates tuition fees' impact on prospective students, particularly on graduation rates, an aspect largely overlooked in previous research. Tuition fees reduced university enrolment by 3.2 percentage points and graduation rates by 1.8 percentage points. The smaller effect on graduation compared to enrolment suggests that many students deterred by fees might not have completed their degrees even without them, shedding light on the role of fees in reducing “ghost students”– students enrolling primarily for non-educational benefits. The study also finds that women were more negatively affected than men, likely due to their lower representation in high-earning STEM fields, which showed no significant decline in graduation rates. Moreover, tuition fees had a stronger adverse effect in economically disadvantaged areas and influenced student mobility, with students from non-border counties being less able to evade fees by relocating. Together, these studies provide a comprehensive analysis of how tuition fees shape student behavior, offering crucial insights for policymakers considering the introduction or removal of fees in higher education.

Publications

• Tuition Fees and Educational Attainment. SSRN Electronic Journal.
  Bietenbeck, Jan; Marcus, Jan & Weinhardt, Felix
  
• Temporäre Erhebung allgemeiner Studiengebühren: Mehr Studierende schlossen ihr Studium ab, aber weniger schrieben sich neu ein. DIW Wochenbericht, 15, 251–259
  Bietenbeck, J., Marcus, J. & Weinhardt, F.
  
• Tuition fees and educational attainment. European Economic Review, 154, 104431.
  Bietenbeck, Jan; Leibing, Andreas; Marcus, Jan & Weinhardt, Felix
  
• Tuition Fees and Educational Attainment. BSoE INSIGHTS Piece
  Leibing, A.
  
• The effect of tuition fees on university graduation. Berlin School of Economics Discussion Paper, No. 61
  Bachmeier, M. & Marcus, J.