Alternative tuition fees schemes: a simulation exercise

Abstract

ABSTRACT In this paper we use a theoretical model of effort optimization on the part of university students to simulate the effects of different tuition fees schemes. For each of such schemes, we present and discuss the trade-offs that appear among the three outcomes that every exercise of policy evaluation in this context should take into consideration, namely, efficiency – that is, student effort-, student welfare and university revenues. To this end, we depart from the tuition fees policy change that took place in the Spanish public university system in year 2012 and compare it with alternative tuition fees designs. Among other results we find that a design with very low entry fees and high penalty cost for failing the exams is the most suitable one in terms of efficiency and university revenues.