Paying Tuition under Few Credit Constraints: Debt, Field of Study, and Drop Out

This study examines the effects of increased tuition fees in a context with minimal credit constraints—namely, the United Kingdom. It focuses on the effects on students’ financing choices, field of study selection, and dropout rates. Exploiting the UK’s institutional setting, a tuition fee reform that tripled tuition fees, and administrative datasets, I find that higher fees significantly increase the use of government loans but have minimal impact on field of study selection or dropout rates. Suggestive evidence indicates that enrollment is also unaffected. These findings suggest that addressing credit constraints could enable higher tuition fees without significantly harming students.