Marginal Returns to Public Universities. EdWorkingPaper No. 24-946

Annenberg Institute for School Reform at Brown University. Brown University Box 1985, Providence, RI 02912. Tel: 401-863-7990; Fax: 401-863-1290; e-mail: AISR_Info@brown.edu; Web site: http://www.annenberginstitute.org

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Outcomes of Education; Higher Education; Public Colleges; Universities; Minority Group Students; College Students; Cutting Scores; College Entrance Examinations; College Admission; Enrollment; Paying for College; Tuition; Student Costs; Grants; Disadvantaged

SAT (College Admission Test); ACT Assessment

This paper studies the causal impacts of public universities on the outcomes of their marginally admitted students. I use administrative admission records spanning all 35 public universities in Texas, which collectively enroll 10 percent of American public university students, to systematically identify and employ decentralized cutoffs in SAT/ACT scores that generate discontinuities in admission and enrollment. The typical marginally admitted student completes an additional year of education in the four-year sector, is 12 percentage points more likely to earn a bachelor's degree, and eventually earns 5-10 percent more than their marginally rejected but otherwise identical counterpart. Marginally admitted students pay no additional tuition costs thanks to offsetting grant aid; cost-benefit calculations show internal rates of return of 19-23 percent for the marginal students themselves, 10-12 percent for society (which must pay for the additional education), and 3-4 percent for the government budget. Finally, I develop a method to disentangle separate effects for students on the extensive margin of the four-year sector versus those who would fall back to another four-year school if rejected. Substantially larger extensive margin effects drive the results. [The Robert H. Topel Faculty Research Fund at the University of Chicago Booth School of Business provided the research funding.]

As Provided

2024

ED650849