Community College Tuition Changes, Texas

The treatment in this context is eligibility of in-district tuition rates, and the initial program costs is $1000, the average change in community college tuition for municipalities annexed into community college taxing districts during the period of study scaled by the take-up rate. In addition to the direct program cost, Hendren and Sprung-Keyser (2020) include the additional costs due to increased educational attainment, calculated separately for community college and four-year programs, for those living in districts with decreased tuition rates. Hendren and Sprung-Keyser (2020) follow the approach of Zimmerman (2014) and calculate government costs per full time enrollee based on data from the Delta Cost Project. This raises costs by $1,339. Next, Hendren and Sprung-Keyser (2020) account for the changes in taxes paid and transfers received based on the earnings gains calculated in the willingness to pay section. That results in a fiscal externality of -$2314 and, when combined with the educational expenditures, a total net cost of $27.

Combining these estimates, Hendren and Sprung-Keyser (2020) get an MVPF of 349.5. To obtain the confidence intervals, Hendren and Sprung-Keyser (2020) bootstrap the enrollment, earning and tax revenue outcomes. Hendren and Sprung-Keyser (2020) assume (conservatively) these estimates are perfectly correlated across bootstrap iterations. This leads to a confidence interval of [1.61,\infty].

Hendren and Sprung-Keyser (2020) consider alternate approaches to calculating the earnings effect and determining the willingness to pay. In the case of the earnings effect, Hendren and Sprung-Keyser (2020) create a specification where their earnings projections are based on credits attempted at community college. Hendren and Sprung-Keyser (2020) transform credits attempted into an increase in years of schooling and then apply the same earnings projection method from Zimmerman (2014) using these schooling increases. In that case Hendren and Sprung-Keyser (2020) get an MVPF of 9.12 (95% CI: [1.24,\infty). Hendren and Sprung-Keyser (2020) also have an alternate specification that forecasts the earnings gain in education from community college and bachelor’s programs separately. In this case, Hendren and Sprung-Keyser (2020) use estimates from Mountjoy (2019) to estimate the returns to community college. This produces an MVPF of \infty (95% CI: [0.64,\infty). Finally, Hendren and Sprung-Keyser (2020) consider a specification where the scholarship is valued at the cost of the transfer rather than based on the change in long-term earnings. This conservative willingness to pay method ignore any effect from increases in earnings. Instead, it applies the envelope theorem to those induced to get more schooling and assumes they are indifferent to the expenditure. All those who do not change their behavior as a result of the scholarship value it as a dollar-for-dollar transfer. The resulting MVPF for this alternate specification is 32.7 (95% CI: [0.48,\infty).