Economic decisions in the financing and timing of higher education

Chenevert, Rebecca Lynn
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This dissertation is a collection of three studies in the field of higher education. Chapter 2 evaluates the higher education tax benefits which began in 1998. This study analyzes whether the tax treatment has caused changes in the enrollment behavior among those eligible. It explores the effects on full time and part time enrollment and the effects of the rule changes in 2002 and 2003, as well as examines how marginal changes in the tax benefits affect the probability of enrollment. There is an increase in overall enrollment which can be attributed to the tax benefits, although the expansion of the program had very small effects and there were very few changes in full time student status due to the program. The second essay examines students who take a break in their schooling but return to school before beginning their careers. This can cause two separate effects; as time passes, they are growing older, maturing and learning about themselves. However, they also risk depreciation of the human capital they have acquired. This study examines these competing effects on outcomes for individuals who took time off between completing their undergraduate studies and attending law school. Results indicate that those who take time off earn higher grades on average, but that the effect on earnings is dependent on what the individual did during the schooling gap. There does appear to be a small but persistent penalty for those who have a gap in schooling. In the third essay, a model is where altruistic parents care about the bundle of goods their children consume is presented and analyzed. The model results in some empirically testable predictions, which are tested using the National Education Longitudinal Study (NELS). In particular, students whose parents pay the entire cost of schooling should have a lower return to the amount invested than those who pay some of the cost themselves. However, the data show very little difference in the return to the amount invested between the two groups.