Abstract
I investigate the relationship between tuition and fees at US public four-year universities, driven by tuition caps and freeze policies. I find that a one-dollar increase in tuition results in a 45 to 62 cent reduction in fees. This substitution effect arises from state-imposed tuition caps and freezes, which limit tuition increases and lead some institutions to raise or introduce new fees instead. Employing an instrumental variable approach with tuition restriction policies, I reveal that while the fee share has a negative but insignificant effect on first-time college enrollment, it significantly impacts STEM major completions. A 10 percentage point increase in fee share leads to a 1.6 percent decrease in STEM major awards, highlighting the differential effects of fees on various academic programs..
Fees increased as a share of total costs (tuition and fees) at public four-year universities in the past two decades
Notes: Fees and tuition refer respectively to inflation adjusted as of 2019 of average undergraduate in-state fees and average undergraduate in-state tuition. The sample in (b) includes all institutions that have more tuition than fees.