The cost to students for attending an institution of higher education has risen steadily in the recent decades. According to the National Center for Education Statistics, since 1982 the cost for tuition, fees, and room and aboard has increased over 350 percent (adjusted for inflation). This growing financial burden forces many students to increase employment, take longer to obtain a degree, and be less likely to graduate.
A new Upjohn Institute working paper by Jeffrey T. Denning links these trends to changes in financial aid. While he finds modest effects for already-enrolled students, overall additional aid reduces the time it takes for seniors to graduate because they need to work less and can handle more credit hours attempted. The effect was larger for lower-income students who relied more on aid. According to Denning’s back of the envelope calculations, roughly half of the observed increase in time to degree can be explained by rising tuition.
Read "Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints," by Jeffrey T. Denning, Brigham Young University