Attendance Spillovers between Public and For-Profit Colleges: Evidence from Statewide Changes in Appropriations for Higher Education

Abstract

Between 2000 and 2010, U.S. public postsecondary schools experienced widespread and uneven changes in funding from state and local appropriations. We estimate that statewide funding cuts lead to a decrease in public attendance that is offset by an increase in for-profit attendance, with no change in overall enrollment rates. We document a corresponding increase in borrowing, driven by both a shift in attendance toward a higher-borrowing sector and public institutions price adjusting to offset losses in revenue. Finally, we examine potential channels underlying these results and detect meaningful changes in public universities’ tuition, faculty, and competitive admissions slots.

Keywords: enrollment, for-profit colleges, public colleges, state appropriations

JEL Classification: H44, H75, I21, I22, J24